How to claim HRA: rent receipts, landlord PAN and how much is tax-free

Who can claim HRA

House rent allowance is part of many salary structures. You can treat part of it as tax-free if three things are true: your salary includes HRA, you actually pay rent for the home you live in, and you have chosen the old tax regime.

The last condition matters most. The new regime, which is now the default, does not allow the HRA exemption at all. If you have not told your employer that you want the old regime, your whole HRA is taxed through TDS, whatever receipts you submit. So the first step is to check which regime leaves you better off, which the income tax calculator does in a minute with your own salary and rent.

How the tax-free amount is worked out

The exempt part of HRA is the smallest of three amounts, all counted for the months you lived on rent:

• The HRA your employer actually paid you.
• The rent you paid, minus 10% of your basic pay and dearness allowance.
• 50% of basic pay and DA if you live in a metro city, or 40% anywhere else.

Eight cities now count as metros

From Tax Year 2026-27 the 50% limit applies in eight cities: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Earlier only the first four qualified, so renters in the other four can now get a larger exemption on the same salary.

Here is a worked example. Neha lives in Pune. Her basic pay is ₹6,00,000 a year, her HRA is ₹3,00,000 and she pays rent of ₹25,000 a month, or ₹3,00,000 a year. The three amounts are ₹3,00,000 (HRA received), ₹2,40,000 (rent minus 10% of basic) and ₹3,00,000 (50% of basic). The smallest is ₹2,40,000, so that much is tax-free and the remaining ₹60,000 of HRA is taxed. Before Pune was added to the list, the third limit would have been 40%, also ₹2,40,000, so in her case the change makes no difference; with higher rent it would.

Notice that rent below 10% of basic pay gives no exemption at all, and paying more rent than your HRA does not raise the exemption beyond the HRA you receive.

The proof your employer will ask for

Employers usually collect proof between January and March, so that the TDS in the last months of the year reflects your final claim. Expect to be asked for:

• Rent receipts, normally one per month, showing your name, the rented address, the amount, the period and the landlord's signature.
• Your landlord's PAN, if the rent for the year is more than ₹1 lakh. That is about ₹8,334 a month or more.
• A copy of the rent agreement, which many employers ask for even though receipts are the main proof.
• The yearly declaration form in which you list the rent and the landlord's details.

Making rent receipts the easy way

Writing twelve receipts by hand is tedious, and small mistakes such as a wrong date or a missing month are a common reason claims are questioned. The rent receipt generator makes all of them at once: enter the tenant, landlord and rent, choose the months, and download a PDF with three receipts per page. Each one shows the amount in figures and words, the exact period, the payment mode and a signature line. Print it and ask your landlord to sign every receipt.

If you pay in cash and the rent is more than ₹5,000, the usual practice is to fix a ₹1 revenue stamp on each receipt and have the landlord sign across it. The generator prints a box for the stamp in that case. Paying by UPI or bank transfer is better still: the bank record backs up every receipt.

When the landlord has no PAN

Some landlords, often elderly owners, do not have a PAN. If your rent is above the ₹1 lakh limit, ask the landlord for a signed declaration saying they do not hold a PAN, with their name and address, and give it to your employer with the receipts. Without either the PAN or the declaration, the employer may refuse the exemption.

Paying rent to your parents

You can claim HRA for rent paid to a parent who owns the house you live in, as long as the arrangement is genuine. Pay the rent from your bank account to theirs every month, keep a simple rent agreement, and make sure your parent shows the rent as income in their own tax return. If they are in a lower tax bracket, the family pays less tax overall; if the money never actually changes hands, the claim can be disallowed.

Missed the employer deadline?

If you did not submit proof in time, your employer will have taxed the full HRA. You can still claim the exemption when you file your income tax return, as long as you chose the old regime and keep the receipts, PAN details and payment records safely in case the claim is checked. The refund then comes through the return. Use the salary calculator to see how much the exemption changes your monthly take-home pay for the next year.