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How much of your HRA is tax-free?
Your exempt HRA is the lowest of three figures: the HRA you received, your rent less 10% of salary, and 40% of salary, or 50% in listed big cities. Kochi and other Kerala cities use 40%. You can claim it only under the old regime, and you need to be paying rent.
Draft rules: not yet verified by a CA. Do not rely on this figure.
Tax year 2026-27: April 2026 to March 2027, under the Income-tax Act, 2025. Returns for it are filed in 2027.
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₹2,04,000 of your HRA is exempt. ₹96,000 stays taxable.
- HRA you received₹3,00,000
- Rent less 10% of salary₹2,04,000
- City limit on salary₹2,40,000
- Exempt HRA (the lowest of these)₹2,04,000
- Taxable HRA₹96,000
Estimate for planning, not tax advice.
Exempt HRA₹2,04,000
Worked example
Salary ₹6,00,000, HRA ₹3,00,000 and rent ₹22,000 a month, living in Kochi.
₹2,04,000 of your HRA is exempt. ₹96,000 stays taxable.
| HRA you received | ₹3,00,000 |
|---|---|
| Rent less 10% of salary | ₹2,04,000 |
| City limit on salary | ₹2,40,000 |
| Exempt HRA (the lowest of these) | ₹2,04,000 |
| Taxable HRA | ₹96,000 |
Common questions
Which cities get the 50% limit?
For tax year 2026-27: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Before that year, only the first four. Kerala cities use 40%.
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