HRA Exemption: How to Save Tax on House Rent (2026)

If you are a salaried employee who pays rent, HRA is one of the most valuable tax-saving tools available.

What Is HRA Exemption? HRA exemption is the portion exempt from income tax under Section 10(13A). It is the MINIMUM of:

1. Actual HRA received
2. Rent paid minus 10% of basic salary
3. 50% of basic (metro) or 40% (non-metro)

Example:

• Basic: Rs.50,000/month, HRA: Rs.20,000/month, Rent: Rs.15,000/month, City: Mumbai
• Actual HRA: Rs.2,40,000
• Rent - 10% basic: Rs.1,80,000 - Rs.60,000 = Rs.1,20,000
• 50% of basic: Rs.3,00,000
• HRA Exemption = Rs.1,20,000

Documents Required:

• Rent receipts (with landlords PAN if rent exceeds Rs.1 lakh/year)
• Rent agreement
• Form 16 from employer

Tips to Maximize:

1. Negotiate HRA in your salary structure
2. Pay rent to family members
3. Always collect rent receipts
4. Get landlords PAN for rent above Rs.1 lakh/year

Need help with tax planning? Contact Insurance Support for expert advice.