Your rent
Only rent above ₹5,000 a month (10% of salary) counts. Each rupee of rent above that adds a rupee, up to the next limit.
HRA calculator
With ₹50,000 a month of salary for HRA, ₹20,000 of HRA and ₹20,000 of rent in Bengaluru, ₹15,000 a month of your HRA is tax-free under the old regime (₹1,80,000 for 12 months), and ₹5,000 a month is taxed.
- Tax Year 2026-27 · verified 29 September 2026
- From rule 279 of the Income-tax Rules
- By the Accurio.in team
Tax-free HRA · old regime · Tax Year 2026-27
₹15,000 a month
₹1,80,000 for 12 months · ₹5,000 a month taxed
- HRA received
- ₹20,000
- Rent above 10% of salaryLeast
- ₹15,000
- 50% of salary
- ₹25,000
The least of the three is tax-free (rule 279). In the new regime all HRA is taxed.
₹15,000 a month
would be tax-free at 40% of salary instead of 50%. The same here: another of the three amounts is no higher.
₹20,000 a month taxed
The new regime allows no HRA exemption (s.202(2)(a)): all of it is taxed as salary there.
How this is calculated
Rule 279: the least of three amounts is tax-free
- The HRA you received for the months you rented.
- The rent you paid above 10% of salary for those months; nothing if the rent is not more than that.
- 50% of salary in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad; 40% in any other place.
For HRA, “salary” includes dearness allowance if your terms of employment provide for it, but no other allowance or perquisite (rule 279(2)(b)). Commission fixed as a percentage of the turnover you achieve, under your terms of employment, counts as salary too. The Supreme Court held so for an almost identically worded definition of salary in the provident-fund rules of the 1961 Act (Gestetner Duplicators, [1979] 2 SCR 788), and the department’s HRA calculator asks for it with basic salary and DA. The rest of your HRA is taxed as salary. From the Income-tax Act, 2025 (Schedule III, Sl. No. 11) and the Income-tax Rules, 2026 (rule 279). Rules checked 29 September 2026.
Assumptions
- The old regime, for Tax Year 2026-27, the financial year from 1 April 2026 to 31 March 2027. The new regime allows no HRA exemption (s.202(2)(a)).
- Your HRA is paid to meet rent; you live in the rented home, do not own it, and pay the rent (Schedule III, Sl. No. 11).
- The same pay, HRA and rent each month, for one home. The rule does not say how to combine two homes or cities in a year.
- The city is where the rented home is. See the question below.
Which city counts: where I live or where I work?
Where you live: the city of the rented home. The Income Tax Department’s own HRA calculator asks for the “Location of residential accommodation”, as the column of rule 279’s table is headed, and the Act lets the limit depend on “the area or place in which such accommodation is situated”. One clause of rule 279 does speak of an employee “employed in the location”, so if you live and work in different places, one of which is a listed city, the second card under the calculator shows the figure at the other rate.
I live in Gurugram or Noida. Does that count as Delhi?
No. Rule 279 names Delhi only, not the rest of the National Capital Region, and the department’s calculator also lists Delhi alone. A home in Gurugram, Noida, Ghaziabad or Faridabad counts as “any other place”: 40% of salary.
Is HRA tax-free in the new regime?
No. The new regime (s.202, the default) is computed without the HRA exemption, so all the HRA you receive is taxed as salary. The exemption is available only if you opt out into the old regime (s.202(4)).
Can I claim it if I live in my own house?
No. The exemption is only for a home you occupy, do not own and actually pay rent for (Schedule III, Sl. No. 11, conditions (c) and (d)).
What changed (latest: 1 April 2026)
The rules this page uses, by the date each took effect, newest first. Each was last checked against its official source between 29 September 2026 and 30 September 2026.
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- HRA exemption: the part of a house rent allowance not taxed (Schedule III Sl. No. 11; Income-tax Rules 2026 rule 279)
- Cities with 50% HRA exemption limit: Delhi, Mumbai, Kolkata, Chennai → Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad (all others 40%); old regime only
Mistakes we have fixed on any page are listed on Corrections.