How to use the HRA calculator
Pick the financial year and the city you rent in, then enter your monthly basic salary, any dearness allowance that counts towards retirement benefits, the HRA in your payslip and the rent you pay. If you rented for only part of the year, change the number of months. Choose your old-regime tax slab to see roughly how much tax the exemption saves.
The HRA exemption formula
The tax-free part of your HRA is the lowest of three amounts: the HRA you actually received, the rent you paid minus 10% of your salary, and 50% of your salary in a listed city or 40% anywhere else. Salary here means basic pay plus any dearness allowance that counts for retirement benefits, not your full gross pay. Whatever is left of your HRA after the exemption is taxed with the rest of your salary.
Which cities get the 50% limit
For years only Delhi, Mumbai, Kolkata and Chennai qualified. From FY 2026-27, the Income-tax Rules, 2026 add Bengaluru, Hyderabad, Pune and Ahmedabad, so renters there can claim up to 50% of salary instead of 40%. The calculator applies the list for the year you choose. Confirm with your employer before you rely on it, since payroll teams apply the rules that bind them.
A worked example
Your basic salary is ₹50,000 a month, your HRA is ₹25,000 and you pay ₹22,000 rent in Mumbai. Over the year the three limits are ₹3,00,000 of HRA received, ₹2,04,000 of rent above 10% of salary, and ₹3,00,000 as half your salary. The lowest is ₹2,04,000, so that much is tax-free and ₹96,000 is taxed. In the 30% slab with 4% cess, the exemption saves about ₹63,648.
What the 2026 city change is worth
Take a basic salary of ₹40,000, HRA of ₹20,000 and rent of ₹25,000 in Pune. In FY 2025-26 the 40% cap limited the exemption to ₹1,92,000 a year. In FY 2026-27 the cap rises to 50%, so the full ₹2,40,000 of HRA is tax-free. That extra ₹48,000 of exemption is worth about ₹14,976 in the 30% slab.