Section 10(13A) HRA Exemption FY 2025-26: Formula, Metro Cities, Landlord PAN and Rent to Parents

How it works

House Rent Allowance is part of salary. Section 10(13A) of the Income-tax Act 1961, read with rule 2A, keeps a portion of it out of your taxable income if you live in rented accommodation and pay the rent yourself. The exemption is the least of three figures worked out for the period in which you paid rent, so a change in salary or city mid-year means computing it in parts.

The three figures are: the HRA you actually received; rent paid minus 10% of basic salary plus dearness allowance; and 50% of basic plus DA if you live in Delhi, Mumbai, Kolkata or Chennai, or 40% anywhere else. Gurugram, Noida, Bengaluru, Hyderabad and Pune are 40% cities for this purpose, whatever their rents. Salary here means basic plus DA that counts for retirement benefits, plus commission as a fixed percentage of turnover.

Paying rent to your parents is allowed if they own the house and the rent actually moves to their account. They must report it as house property income in their own return. Rent to a spouse is not accepted. If annual rent exceeds ₹1,00,000, give your employer the landlord's PAN, or a declaration if the landlord has none. If monthly rent exceeds ₹50,000, you must deduct 2% TDS under section 194-IB and file Form 26QC.

Because the formula runs month by month, the exemption changes whenever any input changes. A salary hike in October, a move from Bengaluru to Mumbai in December, or two months with no rent because you stayed with family each produce a separate computation for that period. Employers usually do this in the payroll system once you upload the receipts. Rent receipts need the landlord's name, the address of the house, the month, the amount and a signature; a revenue stamp is needed only for cash payments above ₹5,000. Employees who own a house in another city can still claim HRA for the city where they work, and can claim home loan interest on the owned house at the same time.

What to do next

Submit rent receipts, the rent agreement and landlord PAN to your employer before the January or February proof deadline so that the exemption appears in Form 16 and TDS is lower through the year. If you missed the employer deadline, you can still claim the exemption in the return by reducing the taxable salary figure, but keep the proof. If your salary has no HRA component, claim section 80GG instead, up to ₹60,000 a year, provided neither you nor your spouse owns a house in the city where you work. Generate month-wise receipts with the rent receipt tool if your landlord does not issue them. If you paid rent above ₹50,000 a month at any point in the year, deduct 2% TDS once at the end of the tenancy or the year, deposit it through Form 26QC within 30 days, and give the landlord Form 16C; the department matches this against your HRA claim.