Find how much of your House Rent Allowance is exempt from income tax. The law allows the least of three amounts, and all three are shown so you can see which one applies to you.
All three statutory amounts are calculated from your salary, HRA and rent.
The smallest of the three is your exempt HRA.
Anything above that is added to your taxable salary.
Only Delhi, Mumbai, Kolkata and Chennai count as metro cities for this purpose.
Exemption: Least of the three below
1: Actual HRA received
2: Rent paid − 10% of (basic + DA)
3: 50% of (basic + DA) for metro, 40% for non-metro
Can I claim HRA under the new tax rules?
No. The HRA exemption is only available under the old rules. This is one of the main reasons people who pay high rent often still find the old rules cheaper.
Can I claim HRA if I pay rent to my parents?
Yes, provided the arrangement is genuine — your parents must actually own the property and must declare the rent as income in their own return. Keep rent receipts and pay by bank transfer.
Which cities count as metro cities for HRA?
Only Delhi, Mumbai, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, and all other cities use the 40% limit, even though they are also large cities.
Can I claim both HRA and a home loan deduction?
In some cases, yes — for example, if you own a house in one city but genuinely live on rent in another city for work. Your claim must match your real situation.