HRA Exemption Calculator
Schedule III — S.No. 11

This calculator helps salaried employees determine the amount of House Rent Allowance (HRA) that is exempt from income tax under Schedule III (Table: S.No. 11) of the Income Tax Act, 2025, read with Rule 279 of the Income Tax Rules, 2026.

If you receive HRA from your employer and pay rent for your accommodation, you can claim a portion of the HRA as tax-exempt. The exempt amount is the least of three conditions prescribed under Rule 279, which this tool calculates instantly.

Who can use this? Any salaried individual who receives HRA as part of their salary and is not opting for the simplified tax regime under Section 202 of the Income Tax Act, 2025. Taxpayers who have opted for Section 202 are not eligible to claim HRA exemption.

Key change from the old law: The list of Metro cities has been expanded. Under Rule 279, the following 8 cities are recognised as Metro cities attracting the higher 50% exemption: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru.

Schedule III (Table: S.No. 11) of the Income Tax Act, 2025 is the provision corresponding to Section 10(13A) of the erstwhile Income Tax Act, 1961. It exempts from total income any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, to the extent such allowance does not exceed the amount calculated in accordance with the rules prescribed.

The key conditions for claiming this exemption remain substantively unchanged:

• The allowance must be specifically granted by the employer as HRA.
• The employee must actually pay rent for residential accommodation occupied by them.
• The accommodation must not be owned by the employee.
• The employee must not have opted for the simplified regime under Section 202 of the Income Tax Act, 2025.

The actual quantum of exemption is computed under Rule 279 of the Income Tax Rules, 2026 — the least of the three conditions mentioned therein.

Rule 279 of the Income Tax Rules, 2026 (corresponding to Rule 2A of the IT Rules, 1962) prescribes the quantum of exemption under Schedule III (S.No. 11). The amount exempt shall be the least of the following three amounts:

• Condition 1: An amount equal to 50% of salary where residential accommodation is situated in a Metro city; or 40% of salary in other cities.
• Condition 2: The actual House Rent Allowance received by the employee in respect of the period during which such accommodation is occupied.
• Condition 3: The amount by which rent actually paid exceeds one-tenth (10%) of salary, i.e., Rent Paid − 10% of Salary.

Expanded Metro Cities under Rule 279: Unlike the old Rule 2A which recognised only 4 metros (Mumbai, Calcutta, Delhi, Chennai), Rule 279 of the IT Rules, 2026 recognises 8 Metro cities for the purpose of the 50% higher exemption: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru.

For the purpose of Rule 279, “Salary” means Basic Salary + Dearness Allowance (if it forms part of retirement benefits) + Commission as a fixed percentage of turnover. All other allowances and perquisites are excluded.

Salary is computed on a due basis — the salary for the period for which the accommodation was actually occupied and HRA was received.