HRA is house rent allowance, the part of salary an employer pays because you rent a house. The cash is real. The tax exemption is a separate sum, and only the old regime still allows it.
In the Income-tax Act, 2025 the exemption is Schedule III, table item 11. Before 1 April 2026 it was section 10(13A), read with Rule 2A. From 1 April 2026 the rule number is Rule 279 of the Income-tax Rules, 2026. The amount is the least of three figures: the HRA you actually received, the rent you paid minus 10% of salary, and 50% or 40% of salary. Salary here is basic pay plus dearness allowance. It is not your CTC, and it is not basic plus HRA.
Rule 279 names the cities that use 50%: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Any other place uses 40%. The city is the place of the rented house, not the city on your office letterhead if you live somewhere else.
Section 202 drops this exemption in the new regime. If you file under section 202, the HRA is taxable. You still receive it. You just cannot shelter it. The old regime can shelter the least of the three amounts, and only if you paid rent for a house you do not own. Paying rent to a spouse, or claiming rent on a house you own, is a different and usually losing argument. This page follows the three-way least, which is what the calculator does.
If the rent in the year is more than ₹1 lakh, the declaration to the employer asks for the landlord’s name, address and PAN. That paperwork does not raise the exemption. It only supports the figure you claim.
A worked example
Take a year in Bengaluru. Basic pay is ₹6,00,000. HRA received is ₹2,40,000. Rent paid is ₹1,80,000. Dearness allowance is zero, so salary for the rule is ₹6,00,000.
Rent minus 10% of salary is ₹1,20,000. Half of salary is ₹3,00,000, because Bengaluru is on the Rule 279 list. The least of ₹2,40,000, ₹1,20,000 and ₹3,00,000 is ₹1,20,000. The rest of the HRA, ₹1,20,000, is taxable even in the old regime. The HRA exemption calculator uses the same three lines. The guide writes them out.
Mistakes people make
- Claiming the exemption in the new regime. Section 202 does not allow it.
- Using CTC, or basic plus HRA, as the salary base.
- Taking 50% in a city that is not on the Rule 279 list.
- Assuming the whole HRA is exempt because rent was paid. Only the lowest of the three amounts is exempt.
- Forgetting that the standard deduction is a different cut, and it is available in both regimes.
The section
Schedule III, table item 11 (this was section 10(13A)). The city list is Rule 279 (this was Rule 2A). The new regime’s block on the exemption is section 202 (this was section 115BAC).
Questions
Can I claim HRA in the new tax regime?
No. Section 202 drops the exemption. The HRA your employer pays is taxable if you file under section 202. The old regime can still use Schedule III, table item 11, which was section 10(13A).
Which cities get 50% of salary?
Rule 279 names Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Those use 50%. Any other place uses 40%. The HRA calculator uses that list.
Is HRA worked on my full CTC?
No. Salary for this sum is basic pay plus dearness allowance. A special allowance, a bonus, and the HRA itself stay out of that base. Using CTC makes the exemption look larger than the rule allows.
Sources
Figures checked 28 Oct 2026.