To add House Rent Allowance in your income tax return, file under the old tax regime, calculate the exempt portion as the lowest of three amounts (actual HRA received, 50% or 40% of salary depending on your city, or rent paid minus 10% of salary), and enter that exempt figure under the Section 10(13A) allowances field in your ITR. The portal reduces your gross salary by that amount and recomputes your tax. Everything else — Form 16 reconciliation, documentation, refund processing — flows from getting those two steps right.
Confirm You’re Filing Under the Old Regime
The HRA exemption under Section 10(13A) is available only under the old tax regime. Under the new regime (Section 115BAC), no HRA exemption applies, regardless of how much rent you pay.1Income Tax Department. FAQs on New Tax vs Old Tax Regime
The new regime is the default. You have to actively opt out inside the ITR form itself. In ITR-1 or ITR-2, select “Yes” for the opting-out field. In ITR-3, ITR-4, or ITR-5, select “Yes, within due date.” Skip this and the system files you under the new regime, and your HRA claim disappears no matter what you enter elsewhere.
Before locking in the old regime, compare your full picture against the new regime’s lower slab rates. HRA is one input. Section 80C investments, home loan interest, and other deductions all sit on the same side of the scale.
Calculate the Exempt Amount
The exempt portion of HRA is the lowest of three amounts:
- The actual HRA your employer paid you during the year.
- 50% of salary if you live in a metro city, or 40% if you live elsewhere.
- The rent you actually paid during the year, minus 10% of your annual salary.
For this calculation, “salary” means basic pay plus dearness allowance plus any commission calculated as a fixed percentage of turnover. Other allowances, bonuses, and perks do not count.
From FY 2025-26 onward, the metro list for the 50% rate expanded from four to eight cities: Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad, and Ahmedabad. Every other city uses the 40% rate.
A Worked Example
Say your basic salary is ₹50,000 a month, DA is ₹10,000 a month, HRA received is ₹25,000 a month, you live in Mumbai, and you pay rent of ₹15,000 a month. The annual figures work out like this:
- Salary for HRA purposes: (₹50,000 + ₹10,000) × 12 = ₹7,20,000
- Actual HRA received: ₹25,000 × 12 = ₹3,00,000
- 50% of salary (Mumbai is metro): ₹3,60,000
- Rent paid minus 10% of salary: ₹1,80,000 − ₹72,000 = ₹1,08,000
The lowest is ₹1,08,000. That’s the amount you enter as exempt in your return. The remaining ₹1,92,000 of HRA stays taxable. In most cases the third calculation produces the lowest number, so the gap between rent paid and 10% of salary is what really drives the exemption.
Enter the Exemption in Your ITR
Pull out your Form 16 first. It shows the HRA your employer paid and whatever exemption, if any, they already applied while computing TDS. You need this to know what still has to be claimed in the return itself.
In ITR-1 or ITR-2 — the forms most salaried employees use — go to the salary details section. There is a field for allowances exempt under Section 10. Select the entry for Section 10(13A) — house rent allowance — and enter the exempt amount you calculated. The portal reduces your gross salary by that figure and recomputes total income and tax automatically.
If Form 16 already reflects the correct exemption, your entry should match what’s shown there and no additional refund arises from HRA. If Form 16 shows a lower exemption than you’re entitled to — because you missed the employer’s declaration deadline, or the employer applied a partial figure — enter the full correct exempt amount in the ITR. The difference will flow through as either a lower tax due or a refund.
Documents to Keep on File
You don’t upload rent documents with the return, but you must produce them if the department asks. Keep them for at least six years after filing, since assessments can be reopened.
- A written rent agreement with the property address, monthly rent, duration, and both signatures.
- Rent receipts showing date, amount, landlord’s name and signature, and the property address. If rent paid in cash on a single receipt exceeds ₹5,000, affix a ₹1 revenue stamp. Bank transfer or cheque payments don’t need one.
- The landlord’s PAN or Aadhaar if your total rent for the year exceeds ₹1,00,000. If the landlord has no PAN, get a signed declaration from them stating this along with their name and address.2Comptroller and Auditor General of India. Form 12BB – Statement Showing Particulars of Claims by an Employee for Deduction of Tax Under Section 192
- Bank statements showing rent transfers, which serve as backup if receipts are questioned.
Employees receiving HRA of ₹3,000 a month or less are excused from producing rent receipts under CBDT circulars. Keep them anyway if scrutiny is a possibility.
If You Pay Rent to Your Parents
Rent paid to parents qualifies for HRA exemption, but the arrangement is scrutinized more closely than an arm’s-length tenancy. For the claim to survive:
- The property must be owned solely by the parent you pay. Joint ownership with you disqualifies the claim.
- The rent must reflect market rates for comparable homes in the area.
- Payments should go through bank transfer, not cash.
- A formal rent agreement should be in place with the standard terms.
- Your parent must report the rental income in their own return and pay any tax owed on it.
Rent paid to a spouse does not qualify for the exemption at all.
From April 2026, disclosing your relationship with the landlord becomes mandatory in Form 124 when annual rent crosses ₹1 lakh, which allows the department to cross-check parent-tenant HRA claims against the parent’s reported rental income.
After You File
Once you submit the return, the department processes it and issues an intimation under Section 143(1). This notice states whether the reported figures were accepted, adjusted, or flagged for discrepancy.3Indian Kanoon. Section 143(1) in The Income Tax Act, 1961 It must arrive within nine months from the end of the financial year in which you filed. If excess TDS was deducted because your employer didn’t apply the full HRA exemption, the refund flows through the same intimation.
Penalties for Inflating the Claim
The department cross-references landlord PAN data, Form 26AS, and the Annual Information Statement to flag questionable HRA claims. Under Section 270A, the penalty for underreporting income — which includes claiming an exemption you don’t qualify for — is 50% of the tax payable on the unreported amount. If the department treats it as misreporting (fabricated entries, unsubstantiated claims, suppression of facts), the penalty rises to 200% of the tax payable.4Indian Kanoon. Section 270A in The Income Tax Act, 1961 A claim that crosses into fraud, such as fabricated receipts or a fictitious landlord, can also attract prosecution under Section 276C for willful tax evasion.
Correcting a genuine error your employer made while computing TDS is routine and expected. Manufacturing documents for a rental that doesn’t exist is a different category entirely, and the penalties dwarf the tax at stake.