Period check: AY 2026–27 concerns FY 2025–26 under the 1961 Act. Tax Year 2026–27 concerns April 2026–March 2027 under the 2025 Act. Familiar old section names below are explanatory labels, not current filing references.
HRA exemption is not the rent paid
For eligible old-regime salary cases, compare actual HRA received, rent paid less ten percent of the applicable salary base, and the city-percentage amount under the governing rule. The salary base is not automatically gross pay or CTC. Negative rent-minus-salary results cannot create an exemption.
The metro percentage is specific
The familiar fifty-percent branch concerns Mumbai, Kolkata, Delhi and Chennai under the HRA rule; the other branch is forty percent. A city being a large metro in everyday language does not put it into the fifty-percent branch. Kerala cities use the other branch under that rule.
Check regime and evidence
The ordinary new regime does not allow the familiar HRA exemption. For an eligible old-regime claim, retain the tenancy/payment evidence and employer-requested particulars. Conditions differ from simply entering total annual rent as a deduction.
Worked example
At ₹6 lakh applicable annual salary, ₹2.4 lakh HRA, ₹2.4 lakh rent and a non-metro location, the comparison is ₹2.4 lakh, ₹1.8 lakh and ₹2.4 lakh. The minimum is ₹1.8 lakh, subject to eligibility and the period facts. Salary or location changes can require a period-specific calculation.
Compare tax after calculating exemption
Use the HRA calculator to inspect the arithmetic. Enter the verified exemption into the salary and TDS calculator, rather than rent or total HRA. Use current Act references for Tax Year 2026–27 and retain old references only for the periods they govern.
Official sources and scope
Source review: 2026-10-08. Check the relevant notification and your own records before filing or settling an entitlement.