HRA Exemption
✓ Last verified 14 Sep 2026
The short version
HRA exemption reduces the taxable portion of your House Rent Allowance if you pay rent - calculated as the lowest of three specific amounts, not simply the full HRA received.
The exempt portion of HRA is the lowest of: actual HRA received, rent paid minus 10% of basic salary, or a fixed percentage of basic salary that depends on whether you live in a metro or non-metro city. This three-way minimum means simply receiving a large HRA component doesn't guarantee a large exemption - the calculation depends just as much on actual rent paid. See our article on tax deductions beyond 80C for how HRA fits alongside other old-regime benefits; it requires actual rent receipts or a rental agreement as proof.
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