Can I claim HRA in the new tax regime?

No. HRA exemption is only available under the old regime. If you claim HRA and other deductions, you need to opt for the old regime and compare whether it saves you more.

How is HRA exemption calculated?

HRA exemption is the least of: actual HRA received; 50% of salary if you live in a metro or 40% if non-metro; or rent paid minus 10% of salary. Salary here means basic pay plus dearness allowance.

Can I claim HRA if I pay rent to my parents?

Yes, if it is genuine: the parent must own the home and declare the rent as income, you must actually pay the rent (ideally by bank transfer), and keep a rent agreement and payment proof. If annual rent exceeds Rs 1 lakh, you also need the landlord's PAN.

Which cities count as metro for HRA?

For HRA, the metro cities are Delhi, Mumbai, Kolkata and Chennai, where the 50% limit applies. All other cities use 40%.

Can I claim HRA and home-loan interest together?

Yes, in genuine situations — for example you own a home in one city (claiming home-loan interest) but live on rent in another city for work (claiming HRA). Both must be genuine and documented.

What if my employer doesn't give HRA?

If you pay rent but receive no HRA, you may claim a deduction under Section 80GG (subject to limits), again only under the old regime.

Blog · Tax planning · Updated 12 Jul 2026 · 8 min read

HRA Exemption AY 2026-27: How to Claim (Even Rent to Parents)

One of the biggest reasons the old regime still wins for many people. Here's how to calculate and claim it correctly — with a worked example.

Old regime only: HRA exemption is not available under the new regime. To claim it, opt for the old regime and check whether it saves you more.

How the exemption is calculated

Your HRA exemption is the least of these three:

Actual HRA received from your employer.
50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), 40% otherwise.
Rent paid minus 10% of salary.

"Salary" here means basic pay + dearness allowance (and commission on a fixed percentage of turnover, if any).

Worked example

You live in Mumbai (metro), with basic salary ₹6 lakh/year, HRA received ₹2.4 lakh/year, and rent paid ₹3 lakh/year. The exemption is the least of:

Actual HRA: ₹2,40,000
50% of ₹6,00,000: ₹3,00,000
Rent − 10% of salary = ₹3,00,000 − ₹60,000 = ₹2,40,000

The least is ₹2,40,000 — so ₹2.4 lakh of your HRA is exempt, and only any HRA above that is taxable. At a 30% slab that's roughly ₹72,000 of tax saved.

Documents you need

Rent receipts and/or a rent agreement.
Proof of payment (bank transfer is best).
Your landlord's PAN if annual rent exceeds ₹1 lakh.

Paying rent to your parents

This is allowed and legitimate if it's genuine: the parent must actually own the property, you must actually pay the rent (by bank transfer), and the parent must declare that rent as income in their own return. Keep a rent agreement and payment records. Done properly, it's a valid way to claim HRA within a family — but a paper-only arrangement can be challenged.

HRA + home-loan interest together

You can claim both in genuine cases — e.g. you own a house in one city (claiming home-loan interest) but rent in another city for work (claiming HRA). Both must be real and documented.

No HRA in your salary?

If you don't receive HRA but pay rent, you may be able to claim a deduction under Section 80GG instead (subject to limits) — again, old regime only.

Common mistakes

Claiming HRA under the new regime (not allowed).
No landlord PAN when rent exceeds ₹1 lakh a year.
Paying "rent" in cash with no agreement — hard to defend.

Should you pick the old regime?

Your CA computes your tax with and without HRA + other deductions, and files the cheaper one.

File with a CA →

General information for AY 2026-27, not individual tax advice. Reviewed by a Chartered Accountant.