The exempt HRA is the least of three figures: the HRA actually received, rent paid less 10% of salary, and 50% of salary in a metro (40% elsewhere). Salary here means basic plus dearness allowance. The exemption exists only under the old regime.
Basic salary / mo₹60,000
₹
Dearness allowance
₹
If for retirement benefitsHRA received / mo
₹
Rent paid / mo
₹
Months in year
Marginal tax rate
Results
Exempt HRA, a month₹19,000the least of the three: rent less 10% of salary
Exempt for the year₹2,28,00012 months
Taxable HRA₹60,000
Tax saved₹71,136at 30% + cess
Rent above ₹1 lakh a year: the landlord's PAN goes on the declaration. Rent above ₹50,000 a month: deduct TDS at 2% under section 194-IB.
The three limbs
| Limb | A month |
|---|---|
| HRA received | ₹24,000 |
| Rent paid − 10% of salary | ₹19,000 |
| 50% of salary (metro) | ₹30,000 |
| Exempt (the least) | ₹19,000 |
Assumptions & formula
Section 10(13A) and Rule 2A · old regime only · FY 2026-27Exempt HRA = min(HRA received, rent − 10% × salary, 50% or 40% × salary), salary = basic + DA (for retirement benefits), computed for each period the figures hold- Figures constant through the months entered; change them for a mid-year move or revision and add the periods.
- Under the new regime HRA is fully taxable.
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