HRA Exemption in New Tax Regime 2026: Can You Still Claim It?

By Nitish Bharadwaj · Published Jun 18, 2026 · 5 min

House Rent Allowance exemption under Section 10(13A) is not available under the new tax regime — it applies only under the old regime. Employees receiving HRA who pay rent must compare the tax saving from the HRA exemption plus other deductions against the lower slab rates of the new regime to determine which is more beneficial. This article clarifies the legal position, the calculation method, and the income and rent levels at which HRA makes the old regime worth choosing.

HRA (House Rent Allowance) exemption is one of the biggest deductions for salaried employees — but it only exists under the old tax regime. Under the new regime that became the default in 2023, HRA exemption is not available. Before switching regimes, understand exactly what you would be giving up.

How HRA Exemption Is Calculated (Old Regime Only)

The HRA exemption is the lowest of: actual HRA received, 50% of basic salary for metro cities or 40% for non-metros, and actual rent paid minus 10% of basic salary. For a Delhi employee with ₹80,000 basic salary paying ₹25,000 per month in rent, the annual HRA exemption can be ₹1.5–2 lakh.

When the Old Regime Still Wins

Rent Paid But No HRA Component

If you pay rent above ₹1 lakh per year but your salary structure has no HRA component, you can still claim a deduction under Section 80GG in the old regime — up to ₹60,000 per year. This section is frequently missed by taxpayers and is worth claiming if you qualify for it. The same old-regime-only limitation applies to Leave Travel Allowance — another salary component that stops being tax-free the moment you switch to the new regime.