Generic

How to claim HRA exemption in your ITR: Step-by-step process

By Tata Capital
30 June 2026
10 mins read
3124

HRA exemption can help salaried employees reduce their taxable income if they live in rented accommodation and opt for the old tax regime. The exemption is calculated using a prescribed formula based on salary, rent paid, and city of residence. Taxpayers can claim HRA either through their employer or directly while filing their ITR. Proper documentation, such as rent receipts, rent agreements, and landlord details, is important for a valid claim. Understanding the eligibility conditions and avoiding common mistakes can help ensure a smooth HRA claim process.

HRA exemption is a tax benefit under Section 10(13A) that allows eligible salaried employees living in rented accommodation to reduce their taxable salary by claiming a portion of the House Rent Allowance received from their employer.

For many salaried employees, House Rent Allowance (HRA) forms an important part of their salary package, especially if they live in rented accommodation. The Income Tax Act (1961) allows eligible taxpayers to claim HRA tax exemption under Section 10(13A), which can help reduce their taxable income and lower their overall tax liability. However, there is an important condition – this benefit is available only to taxpayers who opt for the old tax regime. Employees who choose the new tax regime generally cannot claim the HRA exemption.

If you are unsure about the HRA claim rules or wondering how to claim HRA in ITR, this guide will walk you through the eligibility conditions, HRA calculation method, required documents, and the step-by-step process for claiming HRA exemption while filing your income tax return.

What is the HRA tax exemption?

HRA is an allowance paid by employers to their employees to help them meet rental accommodation expenses. This allowance is usually an integral part of the salary structure, especially in big cities where rental costs are high.

Under Section 10(13A) of the Income Tax Act, read with Rule 2A, eligible salaried individuals can claim an exemption on a portion of the HRA received, subject to specified conditions. This HRA tax exemption reduces the taxable portion of an employee’s salary and can help lower the overall tax burden. However, the exemption is available only if the employee lives in a rented house and has opted for the old tax regime.

Also Read – Income tax slab for FY 2025-26

Can you claim HRA under the new tax regime?

As mentioned, the HRA tax exemption under Section 10(13A) is available only to taxpayers who have opted for the old tax regime. It means the employees who choose the new tax regime are not eligible to make an HRA claim.

Since the new tax regime is now the default regime for most taxpayers, the HRA received from the employer becomes fully taxable if you continue under it. If you wish to claim HRA benefits and meet the eligibility conditions, you must opt for the old tax regime while filing your Income Tax Return (ITR).

Also Read – Income tax on a 12 lakh salary

Who is eligible to claim the HRA tax exemption?

To claim the HRA tax exemption, you must fulfill certain HRA claim rules mentioned in the Income Tax Act. Below are the key eligibility rules to claim HRA in ITR:

You must be a salaried employee.
HRA should be a part of your salary package.
You must be living in a rented accommodation.
You should actually be paying rent for the accommodation.
The accommodation should not be your own house.
You must opt for the old tax regime, as HRA exemption is not available under the new tax regime.
Proper rent-related documents should be available if required for verification.

It is important to note that self-employed individuals cannot claim the HRA tax exemption. However, they may be able to claim a deduction under Section 80GG, subject to the prescribed conditions.

How much is the HRA exemption limit?

The amount of HRA tax exemption you can claim is calculated as the lowest of the following:

Actual HRA received from your employer.
50% of your basic salary + DA (Dearness Allowance) if you live in a metro city; 40% of your basic salary + DA if you live in a non-metro city.
Actual rent paid minus 10% of your basic salary + DA.

Note that for FY 2025-26 (AY 2026-27), only Delhi, Mumbai, Kolkata, and Chennai are treated as metro cities for HRA purposes. Although Bengaluru, Pune, Hyderabad, and Ahmedabad have been added to the metro list from FY 2026-27, this expanded 8-metro rule cannot be applied while claiming HRA exemption for FY 2025-26.

Also Read – How to save tax for a salary above Rs. 20 lakhs

HRA exemption calculation with example

Before asking how to claim the HRA exemption, you must understand how to calculate the amount that qualifies for exemption. Let’s assume the following details for a salaried employee living in Mumbai (metro city):

Basic salary + DA – Rs. 6 lakh per year
HRA received – Rs. 2.4 lakh per year
Rent paid – Rs. 25,000 monthly (Rs. 3 lakh per year)

The HRA exemption amount will be the lowest of the following:

Particulars	Amount
Actual HRA received	Rs. 2,40,000
50% of basic salary + DA	Rs. 3,00,000
Rent paid minus 10% of basic salary + DA	Rs. 2,40,000

The lowest amount is Rs. 2,40,000. Therefore, the employee can claim an HRA tax exemption of Rs. 2,40,000 while filing the income tax return.

Also Read – Difference between tax deduction and tax exemption in India

How to claim HRA exemption in your ITR?

If you are wondering how to claim HRA in ITR, here is the step-by-step guide:

1. Collect rent-related documents

Keep copies of your rent receipts, rent agreement, and proof of rent payments. These documents are usually required for an HRA claim in an income tax return.

2. Check HRA details in Form 16

Review your Form 16 and verify the HRA received from your employer. In many cases, the employer may have already considered the HRA exemption while calculating TDS.

3. Calculate the HRA exemption amount

Compute the exempt amount using the HRA calculation method explained above.

4. Fill out the correct ITR form

Fill out the appropriate ITR form based on your income sources and filing requirements. If you have capital gains or foreign income, choose ITR-2; else, ITR-1.

5. Enter the exempt HRA amount

Make sure to report your income correctly. The HRA exempt amount should also be accurate and in accordance with the HRA claim rules.

6. Review and submit the return

At the end, double-check all information carefully and submit your ITR form. Even though you are not required to upload the supporting documents with the form, the income tax department may ask for them later.

What if your employer has already considered HRA in Form 16?

If you have submitted your rent proofs to your employer during the financial year, the HRA details will reflect in your Form 16 Part B. In such cases, the exemption details may also be pre-filled for an automatic HRA claim in the income tax return. However, you should always verify the HRA exemption amount, taxable salary, and other income details before filing your return. If you notice any discrepancy, make the necessary corrections while filing the ITR.

What if you are claiming HRA directly in the ITR?

If you did not submit rent receipts to your employer during the year, you can still claim HRA in ITR while filing your return. You will need to calculate the eligible HRA exemption manually, report the correct taxable salary, and keep all supporting documents ready for verification. Also note that Form 12BB has been replaced by Form 124 from 1 April 2026. You should follow the applicable reporting requirements.

How to show HRA in ITR-1 (Sahaj)?

If your HRA is already reflected in your Form 16, you only need to verify that it is correctly mentioned in the ITR-1. If you did not provide your rent proofs to your employer, you can still show HRA in ITR-1 in the following steps:

Go to the “Salary” schedule under “Gross Total Income”.
Go to the “Exempt Allowances U/S 10” sub-section and select “10(13A)”.
Enter the eligible HRA exemption amount.
Verify that your taxable salary is adjusted accordingly before submitting the return.

Taxpayers who are not eligible to file ITR-1 because of additional income sources may need to use ITR-2 or another applicable ITR form.

What are the documents required to claim the HRA exemption?

You are not required to submit or upload any documents while filing your ITR. It is a completely paperless process, and no proofs are required to be attached. However, you must keep the following documents ready if you have made an HRA claim:

Rent receipts
Rental agreement
Landlord’s PAN (if annual rent exceeds Rs. 1 lakh)
Declaration of HRA

The income tax department may ask for these documents later during verification.

HRA claim rules and special cases

Here are a few HRA claim rules you should keep in mind when filing your ITR:

HRA exemption is available only under the old tax regime.
You must actually pay rent to claim the HRA tax exemption.
HRA should be a part of your salary package.
You must not be the owner of the house in which you are living.
You can claim HRA if you are paying rent to your parents or siblings. The arrangement should be genuine and properly documented.
You can claim HRA even if you own a house in another city and live in rented accommodation.
You can claim HRA tax exemption and home loan tax benefits (u/s 24B and 80C) together.

What if you don’t receive HRA?

If you do not receive house rent allowance from your employer, you can fall back on Section 80GG of the Income Tax Act. This section allows individuals and HUFs (Hindu undivided families) to claim a tax deduction on rent paid, even if there is no HRA. The deduction available is the lowest of the following:

Rs. 5,000 per month (Rs. 60,000 per year)
25% of Adjusted Total Income (ATI)
Actual rent paid minus 10% of ATI

It is important to note that, like the HRA exemption, the deduction under Section 80GG is also available only under the old tax regime.

What are the common mistakes to avoid when claiming HRA?

Avoid these common mistakes when making an HRA claim in your ITR. These mistakes can not only lead to the denial of the exemption but can also result in tax notices.

Claiming HRA exemption even if you have moved to the new tax regime.
Using the wrong city classification (treating a non-metro city as metro).
Not maintaining rent receipts and the rent agreement as supporting proof.
Not providing the landlord’s PAN even if the annual rent exceeds Rs. 1 lakh.
Paying rent in cash without any trail or evidence.
Trying to claim HRA through fake rent documents.
Claiming HRA while living in your own house.

Also Read – Home Loan Tax Benefits for Under Construction Property

Conclusion

HRA exemption can be an effective way for salaried individuals living in rented accommodation to reduce their tax liability. However, the exemption is available only under the old tax regime. It’s important for taxpayers to understand the eligibility, calculation method, documentation requirements, and the filing process. It is also crucial to avoid certain mistakes, such as claiming HRA under the new regime and using an incorrect city classification when calculating the exempt amount. A little diligence can help you avoid claim denial and income tax notices.

FAQs

Can I claim HRA in the new tax regime?

No. HRA exemption is not available under the new tax regime. If you remain in the new regime, the HRA received from your employer becomes taxable as part of your salary income. To claim an HRA exemption, you must opt for the old tax regime and satisfy the prescribed conditions.

How do I claim the HRA exemption while filing ITR?

To claim HRA exemption, calculate the eligible exemption amount, report the correct salary details in your ITR, and ensure the exempt HRA is reflected in the relevant section. Keep rent receipts, rent agreement, and proof of payment safely, as these documents may be required if your return is selected for verification.

Where do I show HRA in ITR-1?

In ITR-1 (Sahaj), HRA exemption is reported under the salary section. Go to the schedule relating to exempt allowances under Section 10 and enter the eligible amount under Section 10(13A). After entering the details, verify that your taxable salary has been calculated correctly before submitting the return.

Is the landlord PAN mandatory to claim HRA?

The landlord's PAN may be required when the annual rent paid exceeds Rs. 1 lakh. If the landlord does not have a PAN, certain declarations may be needed. Taxpayers should maintain proper records and follow the latest income tax requirements while claiming the HRA exemption.

Can I claim HRA if I pay rent to my parents?

Yes. Paying rent to parents can qualify for an HRA exemption if the arrangement is genuine. There should be actual rent payments, proper documentation, and supporting evidence such as rent receipts. The transaction should not be merely a paper arrangement created only for claiming a tax benefit.

Can I claim both HRA and home loan benefits?

Yes, in certain situations. For example, you may own a house in one city but live in rented accommodation in another city because of your job. In such cases, both HRA exemption and eligible home loan tax benefits may be claimed, subject to the applicable tax provisions and conditions.

What if my employer did not consider my HRA?

If your employer did not consider the HRA exemption while calculating TDS, you can still claim it while filing your income tax return. You will need to calculate the eligible exemption yourself, enter the correct details in the ITR, and keep all supporting rent-related documents for future reference.

Which cities qualify for the 50% HRA limit?

For FY 2025-26 (AY 2026-27), only Delhi, Mumbai, Kolkata, and Chennai qualify for the 50% HRA limit. Bengaluru, Pune, Hyderabad, and Ahmedabad have been added to the metro list from FY 2026-27. However, the expanded 8-metro classification applies only from FY 2026-27 onwards.

Previous Post Disclaimer Next Post

Menu