Can I claim HRA and home loan deduction at the same time?

Yes, if the situation is genuine. Example: you own a house in Bengaluru but work and live on rent in Mumbai. You claim home loan interest and principal for the Bengaluru property and HRA for the Mumbai rent. If both homes are in the same city, tax officers often question the claim.

What if my employer does not pay HRA?

If you do not receive HRA (or you are self-employed), you can claim rent under section 80GG instead - subject to lower limits (Rs 5,000/month or 25% of income or actual rent minus 10% of income, whichever is least). Section 80GG requires that neither you nor your spouse own a home in the city.

Do I need to submit rent receipts to my employer?

Yes - for TDS purposes, your employer needs proof to give you the HRA exemption in TDS calculations. If you missed submitting receipts to the employer, you can still claim HRA when filing ITR and get the excess TDS as refund.

Is HRA available if I pay rent to my parents?

Yes, provided the arrangement is genuine: written rent agreement, actual bank transfer of rent each month, parents disclose the rent as income in their own ITR, and you maintain receipts. Tax officers scrutinise such claims - keep clean documentation.

Tax · Guide

HRA exemption calculation - salaried Indians renting a home

If you are salaried, live in rented accommodation, and your employer pays you HRA as part of CTC, the HRA exemption (section 10(13A) under the 1961 Act; carried into the Income-tax Act, 2025) lets you claim part of the HRA as tax-free. The exempt amount is not the full HRA - it is the LOWEST of three formulas. Here is exactly how to compute it.

By FinancePaisa Editorial Team · Research & editorialUpdated 28 September 2026 · 5 min read

On this page (7 sections)

The HRA exemption formula (section 10(13A))

Exempt HRA = MINIMUM of these three:

(a) Actual HRA received from employer in the financial year.
(b) 50% of (basic salary + DA that forms part of retirement benefits) in a metro city; 40% elsewhere. Metro means Delhi, Mumbai, Kolkata or Chennai for FY 2025-26, and those four plus Bengaluru, Hyderabad, Pune and Ahmedabad from tax year 2026-27.
(c) Actual rent paid MINUS 10% of (basic salary + DA that forms part of retirement benefits).

Worked example - Rs 15 lakh CTC, Mumbai renter (illustration)

Suppose your annual basic + DA is Rs 6,00,000, your annual HRA received is Rs 3,00,000, and you pay annual rent of Rs 3,60,000 (Rs 30,000/month) in Mumbai. Compute the three values:

(a) Actual HRA received = Rs 3,00,000
(b) 50% of basic + DA (Mumbai is metro) = 50% of Rs 6,00,000 = Rs 3,00,000
(c) Rent paid minus 10% of basic + DA = Rs 3,60,000 - Rs 60,000 = Rs 3,00,000
Exempt HRA = MIN(3L, 3L, 3L) = Rs 3,00,000. The entire HRA is tax-free in this case.

Worked example - Rs 15 lakh CTC, Bengaluru renter (illustration)

Same salary structure, but you rent for Rs 22,000/month in Bengaluru (annual Rs 2,64,000). Bengaluru moved from the 40% to the 50% limit from tax year 2026-27, so here are both years:

(a) Actual HRA received = Rs 3,00,000
(b) FY 2025-26: 40% of Rs 6,00,000 = Rs 2,40,000. Tax year 2026-27: 50% = Rs 3,00,000
(c) Rent paid minus 10% of basic + DA = Rs 2,64,000 - Rs 60,000 = Rs 2,04,000
Exempt HRA = Rs 2,04,000 in both years, because (c) is the lowest either way. The remaining Rs 96,000 of HRA is taxable.
The new 50% limit only helps when (b) is the binding limit. At Rs 30,000/month rent, (c) becomes Rs 3,00,000 and the exemption rises from Rs 2,40,000 (FY 2025-26) to Rs 3,00,000 (tax year 2026-27).

Documents to keep

Rent agreement in your name (or joint tenant name).
Rent receipts for each month (or at least quarterly).
Landlord PAN if annual rent exceeds Rs 1,00,000. If PAN is not shared, submit a declaration with landlord name and address.
Rent paid via bank transfer, UPI or cheque. Cash is technically allowed but harder to defend in scrutiny.

Common HRA claim mistakes

Claiming HRA while living in your OWN home - not allowed. You must be paying genuine rent to someone else.
Claiming HRA in the new tax regime - disallowed. Switch to old regime if HRA + other deductions make it worthwhile.
Using the wrong city list for the year: Bengaluru, Hyderabad, Pune and Ahmedabad qualify for 50% only from tax year 2026-27, not in your FY 2025-26 return. Gurugram, Noida and other cities remain at 40%.
Missing landlord PAN when annual rent is above Rs 1L - HRA rejected in scrutiny.

Frequently asked questions

Sources & references

Income Tax Act 1961 - Section 10(13A) and Rule 2A — CBDT
Provisions of the Income-tax Act, 1961 vis-a-vis Income-tax Act, 2025 — CBDT
CBDT circular on landlord PAN requirement — CBDT

Rates, fees, eligibility, and product terms cited on this page reflect the sources above at the time of publication and may have changed since. Always verify directly with the lender or regulator.

Old vs new tax regime calculator Income tax for salaried - overview Old vs new regime - HRA is only in old Section 80C deductions Standard deduction