HRA & Tax
HRA Exemption Under New Tax Regime India (FY 2025-26)
Published 20 March 2026 | Updated 13 March 2026 | 7 min read
Quick answer
No. HRA exemption under Section 10(13A) is not available if you choose the new tax regime (introduced under Section 115BAC). To claim HRA, you must opt for the old tax regime when filing your ITR or submitting your investment declaration to your employer. If your HRA plus other deductions (80C, 80D, home loan interest) exceed ₹1.5 lakh or more, the old regime is usually better. Use the HRA calculator to compare.
Is HRA exemption available under the new tax regime?
No. The new tax regime (Section 115BAC) offers lower slab rates but removes most exemptions and deductions — including HRA (Section 10(13A)), LTA, 80C, 80D, and home loan interest (Section 24b). If you are on the new tax regime, your entire HRA component is fully taxable as salary income. To claim HRA, you must elect the old tax regime for that financial year.
- New tax regime: HRA fully taxable — no Section 10(13A) exemption
- Old tax regime: HRA exemption available (least of: actual HRA received, 50%/40% of basic, or actual rent minus 10% of basic)
- Choice is made annually — you can switch each year when filing ITR
- Salaried employees declare regime choice to employer via Form 12BB at the start of the year
- If you forget to declare, employer defaults to new regime from FY 2024-25 onwards
How to decide: old regime or new regime?
The break-even point depends on your total deductions. If your HRA exemption + 80C investments + other deductions exceed the tax saved by the new regime's lower slabs, old regime wins. For most salaried employees paying market-rate rent in metro cities, the old regime is better. Use the formula: calculate tax under both regimes using your gross salary, then compare.
- Annual rent > ₹2.4 lakh in a metro + 80C investments ≥ ₹1.5 lakh: old regime usually wins
- Income < ₹7 lakh: new regime is better (₹0 tax via rebate 87A, regardless of HRA)
- Income ₹7–15 lakh with high rent and 80C: run both calculations
- Income > ₹15 lakh with significant deductions: old regime often better
Can I switch from new to old regime mid-year?
Salaried employees can switch regime when filing their ITR (deadline July 31) even if they declared a different regime to their employer. Your employer will have deducted TDS based on the regime declared, but you can correct it in your ITR and claim a refund if old regime gives you lower tax. Non-salaried individuals with business income face more restrictions — they can only switch back once.
Generate rent receipts for HRA claim | How to claim HRA exemption
What documents do you need to claim HRA under old regime?
To claim HRA under the old tax regime, you need: a valid rent agreement on stamp paper, monthly rent receipts (with landlord signature), landlord's PAN if annual rent exceeds ₹1 lakh (₹8,333/month). Submit these to your employer with Form 12BB, or attach rent receipts to your ITR if self-filing.
- Rent agreement on e-stamp paper (plain paper agreement not accepted by most employers)
- Monthly rent receipts — signed by landlord, with revenue stamp if payment > ₹5,000 in cash
- Landlord PAN — mandatory if annual rent > ₹1 lakh
- Form 12BB declaration to employer (if salaried)
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Get Started FreeFrequently Asked Questions
Can I claim HRA under the new tax regime?
No. HRA exemption under Section 10(13A) is not available under the new tax regime (Section 115BAC). To claim HRA, you must choose the old tax regime for that financial year.
What is the HRA exemption limit under the old tax regime?
HRA exemption is the least of three amounts: (1) actual HRA received from employer, (2) 50% of basic salary for metro cities (40% for non-metros), or (3) actual rent paid minus 10% of basic salary. The resulting amount is exempt from income tax.
Can I switch from new to old tax regime for HRA?
Yes. Salaried employees can switch regime each year when filing their ITR (by July 31). You can declare new regime to your employer but switch to old regime in your ITR and claim a refund. This is legal and common practice.
Is rent agreement mandatory to claim HRA?
Yes, for most employers. While the Income Tax Act doesn't explicitly require a rent agreement, most employers (and all large corporates) require a stamped rent agreement as proof of tenancy, along with rent receipts and landlord PAN.
What if I forgot to opt for old tax regime and my employer deducted TDS under new regime?
You can switch to the old regime in your ITR filing. Your employer's TDS deduction doesn't lock you in. If old regime gives lower tax, the excess TDS will be refunded by the IT department after ITR processing.