Which cities are considered metro for HRA calculation in India?

For income tax purposes under Section 10(13A), only four cities are officially classified as metro: Mumbai, Delhi (including the NCR/Noida/Gurgaon region), Kolkata, and Chennai. The HRA exemption for employees in these cities is 50% of (Basic + DA). All other cities — including Bengaluru, Hyderabad, Pune, Ahmedabad, Jaipur, and Lucknow — are treated as non-metro, with a 40% exemption cap. This list has not been updated since the 1970s despite multiple demands to include Bengaluru and Hyderabad.

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

Yes. You can pay rent to your parents and claim HRA exemption — but it must be properly documented. Requirements: (1) A formal rent agreement signed by both parties, (2) Actual bank transfers for rent payment (cash is increasingly scrutinised), (3) The parent must declare the rental income in their own ITR. If your parent's income is taxed at a lower slab, this can be an effective family tax-planning strategy. However, if you own the house yourself or live rent-free in your parents' house, HRA exemption cannot be claimed.

What is Section 80GG — HRA deduction without employer HRA?

Section 80GG allows self-employed individuals and salaried employees whose employers do not provide HRA to claim a rent deduction — subject to the lowest of: (1) ₹5,000 per month (₹60,000 per year maximum), (2) 25% of total adjusted income, (3) Actual rent paid minus 10% of total income. Eligibility conditions: you must not own a house in the city you work in, and you must file Form 10BA with your ITR. Section 80GG is available only under the Old Tax Regime.

Is landlord PAN mandatory for HRA exemption?

Yes — if the annual rent paid exceeds ₹1 lakh per year (i.e., monthly rent above ₹8,333), you must collect your landlord's PAN and submit it to your employer for TDS adjustment. This is mandatory under the Income Tax Rules. Without the landlord's PAN, your employer may deduct higher TDS from your salary. The landlord is also expected to declare this rental income in their own ITR. For rent below ₹1 lakh annually, PAN is not required but rent receipts and a valid rent agreement are still needed.

Can I claim both HRA exemption and home loan deduction (Section 24b)?

Yes — in specific circumstances. You can claim both HRA exemption (for the rented house where you currently live) and home loan interest under Section 24(b) (for the property you own) simultaneously, provided the owned property is in a different city from where you work and pay rent. For example: working and renting in Bengaluru while owning a house in Delhi allows both claims. If you own and live in a house in the same city where you work, HRA exemption cannot be claimed — since you don't actually need to rent.

What cities are considered metro for HRA calculation?

For income tax purposes, only four cities are classified as metro: Mumbai, Delhi (including NCR), Kolkata, and Chennai. For employees in these cities, HRA exemption is calculated at 50% of (Basic Salary + DA). For all other cities — including Bengaluru, Hyderabad, Pune, Ahmedabad, etc. — the rate is 40%.

What is the Section 80GG deduction for those without HRA?

If you do not receive HRA from your employer (e.g., self-employed professionals), you can claim deduction under Section 80GG — subject to the least of: (1) ₹5,000 per month, (2) 25% of total income, (3) Actual rent paid minus 10% of total income. This is available only if you do not own a house in the city you work in.

HRA Calculator FY 2025-26 | HRA Exemption Under Section 10(13A) | TAXAJ

📐 Section 10(13A) · FY 2025-26

HRA Calculator — Know Your Exemption Before You File

Enter your salary, HRA received, and rent paid. The calculator applies all three conditions under Section 10(13A) and shows your exact tax-exempt HRA in seconds.

The 3-Condition Rule (Section 10(13A))

Actual HRA received from employer

50% of Basic + DA (metro) or 40% (non-metro)

Rent paid − 10% of Basic + DA

✦ Exemption = LOWEST of the three amounts above

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Metro & non-metro

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Monthly or annual

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HRA Exemption Calculator

FY 2025-26 · Section 10(13A) · Old Regime

Basic Salary Monthly / as per mode

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Dearness Allowance (DA) 0 if none

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HRA Received from Employer As per salary slip

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Actual Rent Paid Monthly / as per mode

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City Type

✦ HRA Exempt from Tax

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Breakdown — 3 Conditions

① Actual HRA received—

② 50% / 40% of Basic + DA—

③ Rent paid − 10% of Basic + DA—

HRA Taxable (remaining)—

⚠️ HRA exemption is available only under the Old Tax Regime. Not available under the New Regime (default from FY 2023-24). File with a CA →

How It Works

The 3 Conditions Under Section 10(13A)

HRA exemption = the LOWEST of these three. If rent paid minus 10% of basic is negative, Condition 3 = ₹0 (no exemption on that count).

Condition 1

Actual HRA Received from Employer

The actual House Rent Allowance component as mentioned in your salary slip or CTC break-up. This is the ceiling — you cannot claim more exemption than what your employer paid you as HRA.

Example: If your employer pays ₹20,000/month as HRA, Condition 1 = ₹20,000/month.

Condition 2

50% (Metro) or 40% (Non-Metro) of Basic Salary + DA

DA (Dearness Allowance) is included only if it forms part of retirement benefit computation — typically relevant for government employees. Private sector employees usually have DA = 0.

Metro: Basic ₹50,000 → C2 = ₹25,000. Non-metro: Basic ₹50,000 → C2 = ₹20,000.

Condition 3

Rent Paid − 10% of (Basic + DA)

The excess of rent paid over 10% of Basic + DA. This condition ensures the exemption is meaningful — small rent relative to salary yields a lower (or zero) exemption under this rule.

Example: Rent ₹18,000, Basic ₹50,000. C3 = ₹18,000 − ₹5,000 = ₹13,000.

Worked Example

How HRA Exemption Is Calculated — Step by Step

Monthly figures. Employee in Delhi (metro). Annual amounts = monthly × 12.

Input	Monthly Amount	Annual Amount
Basic Salary	₹50,000	₹6,00,000
Dearness Allowance (DA)	₹0	₹0
HRA Received from Employer	₹20,000	₹2,40,000
Actual Rent Paid	₹18,000	₹2,16,000
City	Delhi — Metro (50%)

Condition	Calculation	Monthly Result	Annual Result
① Actual HRA received	As per salary slip	₹20,000	₹2,40,000
② 50% of Basic + DA (metro)	50% × (₹50,000 + ₹0)	₹25,000	₹3,00,000
③ Rent − 10% of Basic + DA	₹18,000 − 10% × ₹50,000	₹13,000	₹1,56,000
✦ HRA Exempt (Lowest of 3)		₹13,000	₹1,56,000
Taxable HRA (₹2,40,000 − ₹1,56,000)		₹7,000	₹84,000

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Key Insight from This Example

Condition 3 (₹13,000) is the binding constraint — even though the employer pays ₹20,000 HRA and the 50% metro rule allows ₹25,000, the actual rent paid (₹18,000) minus 10% of basic (₹5,000) caps the exemption at ₹13,000. To maximise exemption, you need to pay more rent — ideally so that Condition 3 ≥ Conditions 1 and 2. Paying rent above ₹30,000/month would make you exempt on the full ₹20,000 HRA received in this case.

City Classification

Metro vs Non-Metro — Which Rate Applies to You?

Only 4 cities are classified as metro under the Income Tax Act. Every other city — including Bengaluru, Hyderabad, Pune, and Ahmedabad — is treated as non-metro.

50%

Metro Cities

The 4 official metro cities under Section 10(13A):

●Mumbai — including Thane, Navi Mumbai, MMR
●Delhi — including Noida, Gurgaon, Faridabad, NCR
●Kolkata — West Bengal's capital region
●Chennai — Tamil Nadu's capital

Exemption = 50% of (Basic + DA)

40%

Non-Metro Cities (All Others)

Examples of major non-metro cities for HRA purposes:

●Bengaluru
●Hyderabad
●Pune
●Ahmedabad
●Jaipur
●Lucknow
●Chandigarh
●All others

Exemption = 40% of (Basic + DA)

ℹ️

Even though Bengaluru, Hyderabad, and Pune are larger by population than Kolkata or Chennai, they are classified as non-metro for HRA purposes since the law defines metro only as Mumbai, Delhi, Kolkata, and Chennai. This classification has not changed since 1974 despite multiple finance ministry discussions. The 4-city list remains fixed unless Parliament amends Section 10(13A).

Tax Planning

How to Maximise Your HRA Exemption

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Rent agreement + receipts are mandatory

You must have a valid rent agreement and monthly rent receipts to claim HRA. If rent exceeds ₹1 lakh per year (₹8,333/month), the landlord's PAN is mandatory. Without this, the IT department can disallow the exemption during assessment.

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Paying rent to parents — allowed but documented

You can pay rent to your parents and claim HRA exemption — if there is a formal rent agreement, actual bank transfers (not cash), and the parents declare the rent as income in their own ITR. The parent's income is usually taxed at a lower slab, making this a family tax planning tool.

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Own house + renting in another city

If you own a property in City A but are renting in City B where you work, you can claim HRA exemption AND home loan interest deduction (Sec 24(b)) simultaneously. The two are not mutually exclusive as long as the owned property is in a different city from where you currently reside and work.

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Restructure CTC to maximise HRA

Many employers allow salary restructuring — increasing the HRA component of CTC while reducing the taxable special allowance. Ideally, HRA should be 40–50% of Basic for metro employees to maximise the Condition 2 benefit. Ask your HR if a salary structure review is possible. TAXAJ's CAs advise on optimal CTC restructuring.

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HRA exemption is NOT available under the New Tax Regime

From FY 2023-24, the New Tax Regime is the default. Under the New Regime, the HRA exemption under Section 10(13A) is not available — along with LTA, standard deduction on house property, and most other allowances. To claim HRA, you must explicitly opt for the Old Tax Regime when filing your ITR. TAXAJ CAs compare both regimes before recommending which saves more tax. Get old vs new regime comparison →

FAQ

Frequently Asked Questions on HRA

How is HRA exemption calculated under Section 10(13A)? ▾

HRA exemption is the lowest of three amounts: (1) Actual HRA received from your employer, (2) 50% of Basic + DA if you live in a metro city (Mumbai, Delhi, Kolkata, Chennai), or 40% for non-metro, (3) Actual rent paid minus 10% of Basic + DA. If Condition 3 is negative (rent paid is less than 10% of basic), the exemption for that condition is ₹0. The tax-exempt HRA = lowest of these three. The remaining HRA (if any) is fully taxable as salary income.

Is Bengaluru / Hyderabad / Pune considered metro for HRA? ▾

No. Bengaluru, Hyderabad, Pune, Ahmedabad, and all other cities are classified as non-metro for HRA purposes under Section 10(13A). The law explicitly names only four metro cities: Mumbai, Delhi, Kolkata, and Chennai. This means employees in Bengaluru, despite its high cost of living, get 40% of Basic as the Condition 2 cap — not 50%. This has been a longstanding request to amend the law, but the 4-city list remains unchanged as of FY 2025-26.

Can I claim HRA if I live in my own house? ▾

No. HRA exemption is available only if you actually pay rent for a house you do not own. If you live in your own house, you cannot claim HRA — regardless of whether your employer includes HRA in your salary slip. Similarly, if you stay in your parents' house without paying any rent (formally documented), HRA exemption cannot be claimed. The exemption requires: (1) HRA received from employer, (2) Actual rented accommodation, (3) Rent actually paid.

Is HRA available under the New Tax Regime? ▾

No. HRA exemption under Section 10(13A) is not available under the New Tax Regime. From FY 2023-24, the new regime is the default for all taxpayers. To claim HRA, you must opt for the Old Tax Regime when filing your ITR. Under the old regime, you get HRA exemption but must forgo the new regime's lower tax rates and higher rebate (up to ₹7 lakh effectively tax-free). TAXAJ CAs run the comparison to determine which regime results in lower overall tax for you.

What documents do I need to claim HRA? ▾

Required documents for HRA exemption: (1) Rent agreement signed by both tenant and landlord, (2) Rent receipts for each month (can be handwritten/typed), (3) Landlord's PAN if annual rent exceeds ₹1 lakh (₹8,333/month) — mandatory to submit to employer, (4) Bank transfer records showing rent payment (cash rent is increasingly scrutinised by IT Department), (5) Salary slip showing HRA component. These documents are primarily submitted to your employer for TDS adjustment — the IT portal doesn't require uploads during ITR filing but may request them during scrutiny.

What is Section 80GG for those without HRA? ▾

If you are self-employed or your employer does not provide HRA, you can claim rent deduction under Section 80GG — subject to the lowest of: (1) ₹5,000 per month (₹60,000 per year), (2) 25% of total income (adjusted gross total income), (3) Actual rent paid minus 10% of total income. To claim 80GG: (a) neither you, your spouse, nor minor child should own a house in the city you work in, (b) file Form 10BA, (c) 80GG is only available under the Old Regime. Maximum deduction = ₹60,000 per year.

Can I claim both HRA exemption and home loan interest (Sec 24b)? ▾

Yes — but only in specific circumstances. You can claim both HRA (for the rented house where you live) and home loan interest under Section 24(b) (for the house you own) simultaneously if the owned property is in a different city than where you currently work and rent. For example: you work and rent in Bengaluru but own a house in Delhi (which is unoccupied or let out) — you can claim HRA for the Bengaluru rent AND home loan interest for the Delhi property. If you own and stay in the same city, you cannot claim HRA.

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