Income tax · Individuals and salaried
How do I claim HRA, and can I claim HRA and a home-loan deduction together?
Short answer
HRA exemption is available only in the old regime. The exempt amount is the least of the HRA received, rent paid minus 10% of salary, and 50% of salary in the specified cities (40% elsewhere). From tax year 2026-27 the 50% list adds Bengaluru, Hyderabad, Pune and Ahmedabad to Mumbai, Delhi, Kolkata and Chennai. You can claim HRA and home-loan interest together, for example if your own house is in another city or is let out.
The calculation
Under the 1961 Act the exemption is in section 10(13A). Under the Income-tax Act, 2025 all exempt income is listed in Schedules II to VI, and section 11 excludes it from total income, subject to the conditions in the Schedules; the HRA exemption and its limits are among them.
The exemption is the least of:
- the HRA actually received for the period of rent;
- rent paid minus 10% of salary; and
- 50% of salary if you live in one of the specified cities, or 40% elsewhere.
"Salary" here means basic pay plus dearness allowance (if it counts for retirement benefits) plus commission at a fixed percentage of turnover. The rest of the HRA is taxable.
| City where you rent | Limit |
|---|---|
| Mumbai, Delhi, Kolkata, Chennai | 50% |
| Bengaluru, Hyderabad, Pune, Ahmedabad (from tax year 2026-27, under the Income-tax Rules, 2026) | 50% |
| Everywhere else, including Kanpur and Lucknow | 40% |
For FY 2025-26 (returns being filed now), only the first four cities get 50%.
Example: basic pay ₹6 lakh a year, HRA ₹2.4 lakh, rent ₹2.4 lakh in Kanpur. The three amounts are ₹2.4 lakh, ₹1.8 lakh (₹2.4 lakh minus ₹60,000) and ₹2.4 lakh (40% of ₹6 lakh). The exemption is ₹1.8 lakh; ₹60,000 is taxable. The HRA calculator works this out for you.
Proof
- Give your employer rent receipts and the rental agreement. If the annual rent exceeds ₹1 lakh, the landlord's PAN is required.
- Declare the claim in Form 124 (formerly Form 12BB) from tax year 2026-27, including your relationship with the landlord.
- Rent paid to a parent is allowed if the arrangement is genuine: the parent must own the house and show the rent as income. Rent to a spouse is usually questioned.
HRA and a home loan together
Both can be claimed when there is a genuine reason, for example:
- your own house is in another city, or too far from your workplace;
- your own house is let out, or still under construction; or
- you live in a rented house because your own house is occupied by family.
Home-loan interest (section 24(b)) and principal (section 80C, now 123) are then claimed in addition to HRA, within their own limits. Keep evidence of why you rent.
If HRA was missed at work
If your employer did not allow it, you can still claim HRA in your return (old regime only), with the receipts kept ready in case of a query. If you do not receive HRA at all and are self-employed or salaried without HRA, look at section 80GG instead.
Legal basis
- Section 10(13A), Income-tax Act, 1961 and rule 2A, Income-tax Rules, 1962 (FY 2025-26 and earlier)
- Section 11 and the Schedules of exempt income (Schedules II to VI), Income-tax Act, 2025, with the Income-tax Rules, 2026 (tax year 2026-27 onwards)
- Sections 24(b) and 80C, Income-tax Act, 1961 (home-loan interest and principal); section 80C is now section 123
Official sources
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