Key takeaways
HRA exemption is available to salaried employees under the old tax regime, not under the new default regime.
The exempt amount is the lowest of three limits based on HRA received, rent paid and salary.
Landlord's PAN is generally required when annual rent exceeds ₹1 lakh.
Paying rent to parents can be valid if genuine, documented and the parent declares the income.

House rent allowance (HRA) can reduce tax for salaried tenants. To claim it, you need the right regime, correct calculations and proper documents.

Who can claim

Salaried employees who receive HRA from their employer, live in rented accommodation and pay rent, and opt for the old tax regime.

The calculation

The exempt HRA is the lowest of:

Actual HRA received.
Rent paid minus 10% of salary (basic + DA).
50% of salary for specified metro cities, 40% elsewhere.

Salary here means basic pay plus dearness allowance forming part of retirement benefits.

Illustrative example

Item	Amount (annual)
Basic salary	₹6,00,000
HRA received	₹2,40,000
Rent paid	₹2,16,000
Rent minus 10% of salary	₹1,56,000
40% of salary (non-metro)	₹2,40,000
Exempt HRA (lowest)	₹1,56,000

Figures are invented for illustration.

Documents

Rent receipts with landlord's name, address, amount, period and signature.
Rent agreement.
Landlord's PAN if annual rent exceeds ₹1 lakh.
Bank transfer records.

Paying rent to parents

It can be valid if you actually pay rent, the parent owns the property, there is an agreement and bank transfers, and the parent declares the rent as income. Sham arrangements can be disallowed.

Not receiving HRA?

Self-employed people or employees without HRA may be eligible for a separate deduction for rent paid under the old regime, subject to conditions and limits.

New regime

The new default regime does not allow HRA exemption. Compare both regimes each year.

India's Income-tax Act, 2025 restructured provisions from April 2026; confirm current rules with your employer or a tax adviser.

See rent agreement clauses for a sound agreement.

Frequently asked questions

Can I claim HRA under the new tax regime?

No. HRA exemption is generally available only under the old tax regime.

Is landlord PAN mandatory for HRA?

Employers generally require the landlord's PAN when annual rent exceeds ₹1 lakh.

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

Yes, if the arrangement is genuine, the parent owns the property, rent is paid via bank and the parent declares it as income.

How is HRA exemption calculated?

It is the lowest of actual HRA, rent paid minus 10% of salary, and 50% (metros) or 40% (others) of salary.

Related HomeAcross guides

Official sources and further reading

Income Tax Department

This guide is general information, not legal, tax or financial advice. Rules, rates and procedures change; confirm current requirements with the relevant authority or a qualified professional before you act. Read our editorial policy.

HRA Exemption and Rent Receipts: A Tenant's Guide

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