The only formula difference is the third limb: 50% of HRA salary for a rented house in Mumbai, Kolkata, Delhi or Chennai and 40% elsewhere.
The only formula difference is the third limb: 50% of HRA salary for a rented house in Mumbai, Kolkata, Delhi or Chennai and 40% elsewhere. HRA exemption itself is available in every city if the other conditions are met.
This article uses the AY 2026–27 framework for income earned in FY 2025–26 under section 10(13A) of the Income-tax Act, 1961 read with Rule 2A. For this period, and in the current official departmental material reviewed on 1 August 2026, the 50% salary limb is restricted to Mumbai, Kolkata, Delhi and Chennai; all other locations use 40%. HRA exemption is ordinarily unavailable under the default new tax regime, so regime selection is a threshold eligibility question.
With the same salary, HRA and rent, the employee in Delhi gets ₹60,000 more exemption because the city limb is binding. At a 30% marginal rate plus cess, that can change tax by roughly ₹18,720. If actual HRA were only ₹2,00,000, both cities would have the same ₹2,00,000 exemption because actual HRA would be the lowest limb.
For the complete rules on this topic, see the core guide: HRA Exemption: Rules, Formula and Maximum Limit.
See the broader Income Tax & Salary knowledge hub for related rules and calculators on this topic.
The only formula difference is the third limb: 50% of HRA salary for a rented house in Mumbai, Kolkata, Delhi or Chennai and 40% elsewhere. HRA exemption itself is available in every city if the other conditions are met.
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