HRA Tax Exemption 2026 - Calculation Formula, 8 Metro Cities NEW List, Section 10(13A) Complete Guide

HRA Tax Exemption 2026 - Section 10(13A) Calculation, 8 Metro Cities Updated List

Bhaiyon, HRA (House Rent Allowance) salaried employees ka biggest tax saver hai under Section 10(13A). 30% slab me Rs 2-3 lakh annual saving possible. CRITICAL 2026 UPDATE: 1 April 2026 se 8 metro cities banaye gaye (pehle 4) - Bengaluru, Pune, Hyderabad, Ahmedabad ab 50% HRA exemption ke liye eligible (pehle 40%). IT/banking employees ke liye game-changer. Old tax regime ONLY - new regime me HRA NAHI. Income Tax Act 2025 (1 April 2026) ne Section 10 ko Schedules me move kiya - rules same. Annual rent Rs 1 lakh+ = landlord PAN mandatory + NEW 2026 rule = landlord-tenant relationship disclosure required.

Bengaluru/Pune/Hyderabad IT employees ke liye big update! Same rent + salary = 10% extra HRA exemption automatic from April 2026. Rs 50K+ annual saving possible.

HRA 2026 - Quick Info

NEW 2026 Update - 8 Metro Cities List

Old Metros (Always 50% - 4 cities)

1. Delhi (NCR)
2. Mumbai (Maharashtra)
3. Chennai (Tamil Nadu)
4. Kolkata (West Bengal)

NEW Metros from 1 April 2026 (50% - 4 added)

5. Bengaluru (Karnataka) - upgraded from 40%
6. Pune (Maharashtra) - upgraded from 40%
7. Hyderabad (Telangana) - upgraded from 40%
8. Ahmedabad (Gujarat) - upgraded from 40%

Non-Metro (40% exemption)

ALL OTHER cities - Patna, Lucknow, Jaipur, Bhopal, Indore, Chandigarh, Kanpur, Nagpur, Surat, Visakhapatnam, Ranchi, Bhubaneswar, Coimbatore, Vadodara, Gurgaon, Noida, Ghaziabad etc.

Big winner: ~50 lakh IT employees in Bengaluru/Pune/Hyderabad + Ahmedabad businessmen get instant 10% extra HRA exemption from April 2026.

HRA Calculation Formula (Section 10(13A))

HRA Exemption = LOWEST of these 3 amounts:

Limit 1: Actual HRA Received

• Whatever HRA amount employer pays in salary slip
• E.g., Rs 25,000/month × 12 = Rs 3,00,000/year

Limit 2: 50% / 40% of Salary

• Metro cities (8): 50% of (Basic + DA + Commission)
• Non-Metro: 40% of (Basic + DA + Commission)
• E.g., Basic Rs 50K/month = Rs 6L/year → 50% metro = Rs 3,00,000

Limit 3: Rent Paid Minus 10% of Salary

• Actual rent paid during FY MINUS 10% of salary
• E.g., Rent Rs 30K/month × 12 = Rs 3.6L. Salary Rs 6L → 10% = Rs 60K
• Rs 3.6L - Rs 60K = Rs 3,00,000

Lowest of the 3 = Tax-Free HRA

Salary for HRA = Basic + DA + Commission (fixed % turnover only) - NOT CTC, NOT gross. Important distinction.

HRA Calculator - Bengaluru 2026 Example

Sumit (Bengaluru IT employee): Basic Rs 50K/mo (Rs 6L/year), HRA Rs 25K/mo, Rent Rs 22K/mo (Rs 2.64L/year)

HRA Exemption = Rs 2,04,000 → Tax saved (30%) = Rs 61,200/year

Old 40% rule yahan same result deta - L3 lowest hai. City upgrade helps when L2 was bottleneck before.

When Bengaluru/Pune Upgrade Helps Most

Upgrade benefits employees where Limit 2 (% of salary) was the bottleneck:

Riya (Pune): Basic Rs 80K/mo, HRA Rs 40K, rent Rs 50K/mo

• Old (40%) L2 = Rs 3,84,000 (was the cap)
• NEW (50%) L2 = Rs 4,80,000 → exemption = Rs 4,80,000
• Extra saving: Rs 96,000 × 30% = Rs 28,800 more annually

Verdict: Pune/Bengaluru me high rent (Rs 40K+) wale employees ko max benefit. ~30-40% IT employees gain Rs 20K-50K extra saving.

NEW 2026 Compliance Rules

Landlord-Tenant Relationship Disclosure (NEW April 2026): Mandatory disclosure when paying rent to family members (parents/spouse/siblings). Genuine family rent allowed BUT bank transfer + documentation required. Cash + family = HIGH risk of disallowance.

Landlord PAN: Mandatory if annual rent > Rs 1,00,000 (Rs 8,333/month). Without PAN claim may be disallowed. Form 60 declaration if landlord no PAN. Cross-verified via AIS portal.

Bank Transfer Trail: Online transfer = strongest proof. Cash payments > Rs 5,000/month = suspicion. Monthly rent receipts mandatory (digital OR signed paper, Rs 1 revenue stamp if rent > Rs 5,000).

Documents Required for HRA Claim

Rent Agreement + Monthly Rent Receipts + Landlord PAN (or Form 60) + Bank Statement (rent transfers) + Form 12BB (submit to employer) + Salary slips (HRA component) + Form 16 Part B (reflects exemption claimed).

Common HRA Scenarios

Living with Parents - Can Claim HRA?

HAAN, allowed with strict conditions: rent agreement (notarized), bank transfer to parent (NO cash), parents file ITR showing rental income, property owned by parent (not jointly). 2026 NEW: Relationship disclosure mandatory.

Without Rent Receipts?

• Annual rent < Rs 1L: Receipts not strictly required (low-rent), but employer may demand
• Annual rent > Rs 1L: Receipts + landlord PAN MANDATORY, else disallowed
• Direct ITR claim: Self-declare via Form 12BB + maintain receipts for AO scrutiny

When HRA Can Be Denied (Even After Proofs)

Bogus rent to family, cash rent without trail, missing landlord PAN (>Rs 1L rent), same address in your & landlord's ITR, multiple claims on same property.

Where to Claim HRA in ITR

• ITR-1: Auto from Form 16 OR "Allowances exempt under Section 10" field, code 10(13A)
• ITR-2: Schedule S → Allowance details → Section 10(13A)
• Old regime mandatory at top of form

Old vs New Regime - HRA Decision

Decision rule: Calculate both - jisme tax kam, vo regime select. Salaried with high rent (Rs 25K+/month) + 80C/80E investments → OLD regime usually wins. Use New vs Old Tax Regime Calculator.

Section 80GG - HRA Alternative (No HRA / Self-Employed)

Agar HRA NAHI milta (consultant, freelancer, no-HRA salary), Section 80GG: Max Rs 5,000/month (Rs 60K/year). LEAST of: Rs 5K/month, 25% total income, rent - 10% total income. Form 10BA filing mandatory. Old regime ONLY.

HRA 2026 FAQs

Q: HRA new regime me milta hai? A: NAHI - HRA exemption OLD tax regime ONLY. New regime me NAHI. ITR me old regime select karna mandatory.

Q: 8 metro cities kaunse hain 2026 me? A: 4 old metros (Delhi, Mumbai, Chennai, Kolkata) + 4 new from April 2026 (Bengaluru, Pune, Hyderabad, Ahmedabad). Total 8 - sab 50% exemption ke liye eligible.

Q: Patna me HRA exemption % kya? A: 40% (non-metro). Patna, Lucknow, Jaipur, Bhopal etc. sab non-metro hain. 50% nahi milega - sirf 8 listed cities me.

Q: Landlord PAN nahi de raha - kya karu? A: Form 60 declaration lo landlord se. Annual rent <Rs 1L = PAN optional. Rs 1L+ = PAN/Form 60 mandatory, varna claim disallow.

Q: HRA + Home Loan dono claim ho sakte hain? A: HAAN - rent in city A + own house in city B (let out / vacant). Section 24(b) home loan + Section 10(13A) HRA dono allowed same year.

Q: Salary me HRA nahi - kya karu? IT Act 2025 me change? A: Use Section 80GG instead - Rs 5,000/month max with Form 10BA filing. IT Act 2025 ne Section 10(13A) ko Schedules me move kiya (1 April 2026) - rules + benefits exactly same.

Related Tax Saving Guides

• Section 24(b) Home Loan Interest Tax Deduction 2026 - Rs 2L self-occupied + UNLIMITED let-out, HRA + 24(b) double benefit
• Section 80E Education Loan Tax Benefit 2026 - NO upper limit interest deduction
• Section 80C Tax Saving Guide 2026 - Rs 1.5L deduction (now Section 123)
• New vs Old Tax Regime 2025-26 Calculator - Regime decision
• ITR Filing FY 2025-26 Guide - Filing process
• NPS Complete Guide 2026 - Rs 50K extra (80CCD)
• Sarkari Naukri Income Tax Guide - Govt employee tax saving
• PM Vidyalaxmi Education Loan 2026 - Rs 10L NO collateral
• DA, HRA Aur Allowance Ka Dhaancha - sarkari HRA kaise tay hota hai

Source: ClearTax + Bajaj Finserv + Tax2win + JM Financial Services + CallMyCA cross-verified. 8-metro city update from 1 April 2026 confirmed via Income Tax Act 2025 amendments. Verified 2 May 2026.