HRA exemption: metro vs non-metro quick check

Three caps, one city flag

HRA exemption (old regime) is the least of: actual HRA received, rent paid minus 10% of salary, and 50% or 40% of salary depending on the city classification used for the rule. "Salary" here usually means basic plus DA where DA forms part of retirement benefits—follow what your payroll uses. Pick the wrong city flag and the third cap moves by a wide margin.

From Tax Year 2026-27, Bengaluru, Hyderabad, Pune and Ahmedabad use the 50% limit along with Mumbai, Delhi, Kolkata and Chennai. Other places use 40%. Remote work does not automatically change the city of residence for rent; what matters is where you live and pay rent, plus employer documentation practice.

New regime: the exemption is usually gone

If you stay in the new regime, HRA exemption is not available in the usual way, so metro vs non-metro inside the HRA formula stops mattering for that year's tax compare. You may still receive HRA as a salary component; it is simply taxed like pay. Run both regimes in the income-tax calculator after you know the exempt HRA from the HRA tool.

Quick check before you file

Enter basic, HRA received, rent paid, and metro/non-metro in the HRA calculator. If rent is low, the rent-minus-10% cap often binds before the 50%/40% rule. Keep rent receipts / agreements as your employer asks. This site does not submit proofs to payroll.