HRA Exemption Explained: Complete Guide to Calculate & Claim in Your ITR

Table of Contents:

• How HRA Exemption Is Calculated
• HRA Exemption in Metro vs Non-Metro Cities: Key Difference
• Calculating HRA Without Rent Receipts
• Step-by-Step Process to Claim HRA in Your ITR
• How Zaggle’s Tax Solution Simplifies HRA Claims
• Frequently Asked Questions

Key Takeaways:

• HRA exemption is calculated as the lowest of three amounts: actual HRA received, 50% (metro) or 40% (non-metro) of Basic Salary plus Dearness Allowance, or rent paid minus 10% of Basic Salary plus DA.
• You cannot claim HRA exemption if you do not pay rent.
• Rent receipts are not the only proof accepted. A rental agreement, landlord’s declaration, and bank statements showing rent payments can also help substantiate your claim.
• Residents of metro cities – Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad, and Ahmedabad – can claim the higher 50% salary limit.
• Supporting documents are not submitted with your ITR but must be retained in case the Income Tax Department seeks verification later.
• Salary revisions, relocation between metro and non-metro cities, or incomplete documentation can change your eligible HRA exemption, making an accurate calculation essential before filing.
• The taxable portion of HRA must be reported correctly in your ITR after deducting the eligible exemption from the HRA received.
• Self-employed individuals cannot claim HRA exemption under Section 10(13A) but may be eligible for a deduction under Section 80GG if they satisfy the prescribed conditions.

HRA Claim in ITR With and Without Rent Receipt: All You Need to Know

Quick Answer

If you receive House Rent Allowance (HRA) as part of your salary and live in a rented house, you can claim an HRA exemption under Section 10(13A) on choosing the old tax regime. The exemption is the lowest of the actual HRA received, 50% of basic salary plus DA for metro cities (40% for non-metro cities), rent paid minus 10% of basic salary plus DA, or nil if no rent is paid. If rent receipts are unavailable, other supporting documents can help substantiate your claim if your employer or the Income Tax Department requests verification. These include your rental agreement, landlord’s declaration, and proof of rent payment.

Many salaried employees receive House Rent Allowance (HRA) as part of their salary to help cover rental expenses. If you receive HRA as part of your salary, pay rent for residential accommodation, and satisfy the prescribed conditions under Section 10(13A), you may be eligible for HRA exemption.

However, many employees end up claiming a lower exemption than they are entitled to. This may be because they misunderstand the calculation, are unsure about the eligibility rules, or believe rent receipts are always mandatory. These mistakes, along with incorrect or incomplete documentation, can also result in errors while filing your return.

If you receive HRA and live in rented accommodation, understanding the rules governing HRA exemption is essential to maximise your tax savings when you choose the old tax regime. Read to know how to claim HRA in ITR, the documents needed, and the conditions you must satisfy to receive the exemption you are entitled to.

How HRA Exemption Is Calculated

The HRA exemption is calculated as the lowest of three prescribed amounts under the Income Tax Rules. Although this may sound complex, the HRA exemption calculation simply ensures that your actual rental expenses and salary structure are represented correctly. The three amounts are:

1. The actual HRA received from your employer
2. 50% of (Basic Salary + Dearness Allowance) if you live in a metro city, or 40% if you live in a non-metro city
3. The actual rent paid minus 10% of (Basic Salary + Dearness Allowance)

If you do not pay any rent, you are not eligible to claim HRA exemption.

Here’s an example of how to calculate HRA exemption with rent receipts. Suppose your salary structure is:

• Basic salary: ₹50,000
• Dearness Allowance (DA): ₹5,000
• HRA: ₹25,000
• You're living in Delhi (metro city)
• You pay ₹28,000 monthly rent

Your three calculations:

1. Actual HRA received: ₹25,000
2. 50% of (₹50,000 + ₹5,000) = 50% of ₹55,000 = ₹27,500
3. Rent paid (₹28,000) minus 10% of (₹50,000 + ₹5,000) = ₹28,000 − ₹5,500 = ₹22,500

The lowest amount is ₹22,500, which is your monthly HRA exemption. The remaining ₹2,500 (₹25,000 − ₹22,500) is added to your taxable salary and taxed according to the applicable income tax slab.

HRA Exemption in Metro vs Non-Metro Cities: Key Difference

One of the biggest factors affecting your HRA exemption is whether you live in a metro or non-metro city. The only difference is the percentage used in the HRA exemption calculation—50% of your basic salary plus dearness allowance (DA) if you live in a notified metro city, and 40% if you live in any other city.

With the new rules in place for AY 2026-27, there are now more cities with higher levels of HRA exemption. In addition, those who claim HRA are now required to list the relationship between landlord and tenant on their income tax return.

If you reside in any of the following 8 metro cities, the 50% rule applies:

• Delhi
• Mumbai
• Chennai
• Kolkata
• Bengaluru
• Pune
• Hyderabad
• Ahmedabad

If you live in any other city, the calculation uses 40% of your basic salary plus DA instead.

Calculating HRA Without Rent Receipts

A common misconception is that you must have rent receipts to claim HRA. These receipts aren’t the only acceptable proof of rent payment. Depending on your employer’s requirements and the Income Tax Department’s notice for verification, other supporting documents may also help substantiate your claim, such as:

• A written agreement with your landlord
• A signed declaration from your landlord confirming the tenancy and rent received
• Bank statements showing rental payments

Be sure to retain sufficient proof of your rent payments when claiming HRA without rent receipts. If you do not have rent receipts, obtain a signed declaration from your landlord. Ensure that this declaration confirms the tenancy, rent amount and the period for which rent was received. Together with documents such as a rental agreement or bank statements showing rent payments, this can help support your HRA claim.

Even if your employer has allowed the HRA exemption, the Income Tax Department may ask you to produce supporting documents during assessment or verification. Keeping these records readily available can help substantiate your claim.

Using the HRA exemption without supporting proof may result in your exemption being denied. In case this happens, you have to pay the additional tax and applicable interest. To avoid unnecessary hassles like this, keep the supporting documents on file.

Step-by-Step Process to Claim HRA in Your ITR

Follow these simple steps to claim HRA exemption while filing your return:

• Calculate your eligible HRA exemption by determining the lowest of the three prescribed amounts mentioned earlier.
• Determine the taxable portion of your HRA by reducing the eligible HRA exemption from the HRA received. This amount will form part of your taxable salary.
• Select and file the appropriate ITR form based on your income and eligibility.
• Report your salary income and the applicable HRA exemption in the relevant salary details while filing your ITR. Ensure the taxable portion of HRA, if any, is correctly reflected.
• Keep supporting documents ready. These include:
  1. Rent receipts
  2. Rental agreement
  3. Bank statements showing rent payments
  4. Landlord's declaration

These documents are usually not uploaded with the ITR but must be retained in case the IT Department requests verification later.

How Zaggle’s Tax Solution Simplifies HRA Claims

Claiming HRA is more than entering your rent amount in the return. Salary revisions during the year, relocation between metro and non-metro cities, or incomplete documentation can all affect the exemption you are entitled to claim. Even small calculation errors may increase your taxable income or result in an incorrect claim.

Zaggle’s tax solution helps you determine your eligible exemption using your salary details, city of residence and rental information. It also assists in reviewing your tax information before you submit your income tax return, helping minimise errors.

With Zaggle, you can get assistance with:

• HRA exemption calculation based on your salary structure
• Metro and non-metro HRA eligibility
• Verification of rent details and supporting documents
• Review of Form 16, AIS, TIS and Form 26AS
• Computation of exempt and taxable HRA
• Selection of the appropriate ITR form
• Expert-assisted income tax return filing

Reviewing your HRA computation and supporting documents before filing your return can make the filing process smoother and help you respond confidently if your claim is selected for verification.

Frequently Asked Questions

1. Can I claim HRA if my rent is less than 10% of my basic salary plus DA?

If the rent you pay is less than 10% of your basic salary plus the dearness allowance that is eligible for exemption, the rent component of HRA exemption calculation based on rent is effectively zero. Since HRA exemption is the least of the 3 prescribed amounts, you may not be eligible for any HRA exemption.

2. Can I claim HRA without rent receipts if my landlord does not give them?

Yes, you can claim HRA without rent receipts even if your landlord does not give them to you. Try to get a signed declaration from your landlord. The tenancy, the amount of rent, and the period of the rent receipt have to be mentioned accurately in this declaration. Bank statements showing regular rent payments can also be used as proof to substantiate your HRA claim.

3. Which cities are treated as metro cities for HRA exemption?

50% HRA calculation is applicable for employees residing in any of the following notified metro cities as per the Income Tax Rules, 2026:

• Delhi
• Mumbai
• Chennai
• Kolkata
• Bengaluru
• Pune
• Hyderabad
• Ahmedabad

4. Can self-employed people claim the HRA exemption?

No. The HRA exemption is available only for salaried employees who receive HRA. However, the self-employed can also claim a deduction under Section 80GG if they are eligible.

5. Can I claim HRA while paying rent to my parents?

Yes. If you pay rent to your parents, you can claim HRA provided the arrangement is genuine and the rent is actually paid. Additionally, the rental income must be reported in your parents’ ITR and appropriate documentation has to be maintained.

6. If I move to a new city or house during the financial year, can I claim HRA?

Yes. You can claim HRA for the entire period of stay in each of the rented accommodation, provided you meet the applicable criteria and have the necessary supporting documents for each property. Your HRA exemption should be calculated on the basis of the city of residence and the rent paid for each period of residence.

7. Can I avail HRA if I live with my spouse?

Yes, provided the tenancy agreement is valid and rent being paid. You can be eligible for HRA exemption even if you stay with your spouse, but you should be able to prove your claim with the right supporting documents if needed.

8. Do I have to attach rent receipts while filing my ITR?

No. As a general rule, rent receipts and other supporting documents are not uploaded at the time of filing of income tax return. But it is better to keep them, as Income Tax Department may ask for them at a later stage during assessment or verification.

9. Can I claim HRA if I pay rent in cash?

Yes. Cash payments are not an automatic disqualifier for your HRA claim. However, it is important that you keep proper evidence of the tenancy and rent paid like signed rent receipts or a declaration from the landlord to substantiate your claim in case your employer or the Income Tax Department asks for proof.

10. Can I claim HRA if I move from a non-metro city to a metro city during the year?

Yes. You will have to calculate your HRA exemption separately for each period based on your city of residence. The 40% limit is applicable when you are residing in a non-metro city while 50% limit is applicable for the period of time in a notified metro city subject to the prescribed conditions.