Metro: Delhi, Mumbai, Kolkata, Chennai
Three-Rule Breakdown (Monthly)
What is HRA Exemption?
House Rent Allowance (HRA) is a salary component provided by employers to cover rental expenses. Under Section 10(13A), a portion of HRA is exempt from income tax based on three conditions, and the lowest of the three applies.
The Three Rules for HRA Exemption
1. Actual HRA received from employer. 2. 50% of basic salary + DA (for metro cities) or 40% (for non-metro cities). 3. Actual rent paid minus 10% of basic salary + DA. The minimum of these three is your exempt HRA.
Which cities are Metro?
For HRA purposes, metro cities are Delhi, Mumbai, Kolkata, and Chennai. All other cities — including Bengaluru, Hyderabad, Pune, Ahmedabad — are classified as non-metro, attracting the 40% limit.
Can I claim HRA under the new tax regime?
No. HRA exemption under Section 10(13A) is only available under the Old Tax Regime. If you opt for the New Tax Regime, you cannot claim this exemption, but you benefit from lower tax rates.