HRA exemption by city
The third limb of the HRA exemption is 50% of basic salary in a metro and 40% everywhere else — and the Income Tax Rules recognise only four metros. Find your city below for the correct rate, local rent levels, and the proof your employer will ask for.
That list comes from Rule 2A and has never been widened. Bengaluru, Hyderabad, Pune, Gurgaon and Noida are all non-metro at 40%, however large they have become.
Metro cities — 50% limb
| City | State | Limb 3 | Typical 2 BHK rent |
|---|---|---|---|
| Delhi | Delhi | 50% | ₹22,000 – ₹45,000 |
| Mumbai | Maharashtra | 50% | ₹40,000 – ₹85,000 |
| Kolkata | West Bengal | 50% | ₹14,000 – ₹28,000 |
| Chennai | Tamil Nadu | 50% | ₹18,000 – ₹35,000 |
Non-metro cities — 40% limb
| City | State | Limb 3 | Typical 2 BHK rent |
|---|---|---|---|
| Gurgaon | Haryana | 40% | ₹26,000 – ₹55,000 |
| Noida | Uttar Pradesh | 40% | ₹18,000 – ₹38,000 |
| Ghaziabad | Uttar Pradesh | 40% | ₹13,000 – ₹25,000 |
| Faridabad | Haryana | 40% | ₹13,000 – ₹24,000 |
| Navi Mumbai | Maharashtra | 40% | ₹20,000 – ₹42,000 |
| Thane | Maharashtra | 40% | ₹22,000 – ₹45,000 |
| Pune | Maharashtra | 40% | ₹20,000 – ₹40,000 |
| Bengaluru | Karnataka | 40% | ₹24,000 – ₹50,000 |
| Hyderabad | Telangana | 40% | ₹19,000 – ₹40,000 |
| Kochi | Kerala | 40% | ₹14,000 – ₹28,000 |
| Coimbatore | Tamil Nadu | 40% | ₹11,000 – ₹22,000 |
| Mysuru | Karnataka | 40% | ₹10,000 – ₹20,000 |
| Visakhapatnam | Andhra Pradesh | 40% | ₹12,000 – ₹24,000 |
| Ahmedabad | Gujarat | 40% | ₹14,000 – ₹30,000 |
| Surat | Gujarat | 40% | ₹12,000 – ₹25,000 |
| Vadodara | Gujarat | 40% | ₹11,000 – ₹22,000 |
| Nagpur | Maharashtra | 40% | ₹11,000 – ₹22,000 |
| Indore | Madhya Pradesh | 40% | ₹11,000 – ₹23,000 |
| Bhopal | Madhya Pradesh | 40% | ₹10,000 – ₹20,000 |
| Jaipur | Rajasthan | 40% | ₹11,000 – ₹24,000 |
| Chandigarh | Chandigarh (UT) | 40% | ₹16,000 – ₹32,000 |
| Lucknow | Uttar Pradesh | 40% | ₹11,000 – ₹22,000 |
| Bhubaneswar | Odisha | 40% | ₹11,000 – ₹22,000 |
| Patna | Bihar | 40% | ₹10,000 – ₹20,000 |
How the exemption is worked out
Under Section 10(13A) read with Rule 2A, the tax-free portion of your HRA is the least of:
- the HRA actually received;
- rent paid, minus 10% of basic salary plus DA;
- 50% of basic plus DA in a metro city, 40% anywhere else.
Two consequences people miss. First, if your rent is low relative to your salary, limb two can be small or even nil — living in a rented home does not by itself guarantee an exemption. Second, the exemption exists only in the old tax regime; the new regime taxes HRA in full and compensates with lower slabs. Compare both before you choose — our in-hand salary calculator shows the new-regime side.
Common questions
Which cities are metro cities for HRA?
Only four: Delhi, Mumbai, Kolkata and Chennai. Rule 2A of the Income Tax Rules names them and has never been expanded. Every other city in India — Bengaluru, Hyderabad, Pune, Ahmedabad, Gurgaon, Noida, Chandigarh and the rest — uses the 40% limb.
Is Bangalore a metro city for HRA?
No. Bengaluru is non-metro for HRA and uses 40% of basic plus DA in the third limb. It is the most common HRA mistake in India, because Bengaluru is a metro in every ordinary sense of the word — just not in Rule 2A.
Are Gurgaon and Noida treated as Delhi?
No. Rule 2A looks at where the accommodation is, not where you work. Gurgaon, Noida, Ghaziabad and Faridabad are in Haryana and Uttar Pradesh, not Delhi, so they take the 40% limb even for someone working in central Delhi.
Does the city change anything other than the 40% or 50% limb?
Not in the formula itself — the other two limbs are your actual HRA and your rent minus 10% of salary. But the city decides your rent level, which drives limb two, and your state decides your professional tax. In low-rent cities limb two usually binds, so the metro percentage never matters.
Can I claim HRA under the new tax regime?
No. The HRA exemption exists only in the old regime. In the new regime the entire HRA is taxable, offset by lower slab rates and the ₹75,000 standard deduction. If your HRA exemption is large, compare both regimes before choosing — a large exemption is worth nothing to you in the new regime, and for many people it is the single biggest reason to stay in the old one.
Can I pay rent to my parents and claim HRA?
Yes, provided the arrangement is genuine: your parents must own the property, the rent must actually be paid — by bank transfer, at a market rate — and they must declare it as income from house property in their own returns, where they also get the 30% standard deduction on it. A backdated agreement with no money moving is disallowed, and because the arrangement is so often abused it attracts scrutiny. You cannot pay rent to your spouse for this purpose.
What if my salary has no HRA component at all?
Then there is no exemption to claim — Section 10(13A) exempts house rent allowance actually received. Section 80GG offers a much smaller alternative for people who pay rent and receive no HRA: the least of ₹5,000 a month, 25% of total income, or rent minus 10% of total income. Like the HRA exemption, it is available only in the old regime.