8 cities, up from 4
Hyderabad, Pune, Ahmedabad and Bengaluru joined the 50 per cent list on 1 April 2026. Everywhere else is still 40.
Source: Income-tax Rules 2026, Rule 279(1)(c), G.S.R. 198(E)
Free Excel calculator
HRA Exemption Calculator in Excel for Indian Employers
Four cities moved onto the 50 per cent rate on 1 April 2026 and most calculators have not caught up. If you have staff in Bengaluru, Hyderabad, Pune or Ahmedabad, an old spreadsheet is quietly understating what they can claim.
- Eight cities on 50%, not four
- Works period by period, as the rule reads
- Asks which regime, because it decides everything
Instant download. No card needed.
Attendo presents
HRA Exemption Calculator
Tax year 2026-27
8
cities on 50%
ATTENDO PRESENTS
What's inside
Six sheets, three you fill in
The rest are formulas. There is a sixth tab too, a short How to Use page.
Sheet 1
Rules and rates
The eight cities, the two rates and the PAN threshold, each with the rule it comes from. It also accepts Bangalore, Bombay, Calcutta and Madras, and tells you on the row that it read them as the current name.
Sheet 2
Employees
One row per person, and the regime column. Get that wrong and every figure underneath it is wrong, so it is the first thing checked.
Sheet 3
Rent periods
One row per stretch of time. All three amounts side by side, and a column saying which of them decided the answer.
Sheet 4
Per employee
Adds the periods, applies the regime, and flags anyone whose rent has passed the point where you need the landlord's PAN.
Sheet 5
Summary
Totals for payroll, plus the short list of things the file cannot decide and a person has to.
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Declarations that stay put
Attendo (formerly Petpooja Payroll) holds each employee's regime choice and rent declaration, so the exemption comes from the record.
Why this matters
Why last year's spreadsheet now gives the wrong answer
For decades the 50 per cent rate belonged to four cities. On 1 April 2026 it became eight.
Rule 279 of the Income-tax Rules 2026 lists Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru at 50 per cent of salary, and everywhere else at 40. The four additions are the ones that matter, because between them they hold a very large share of the country's salaried renters. An employee in Bengaluru on sixty five thousand of basic and dearness allowance, paying thirty seven thousand of rent, is better off by forty eight thousand rupees of exemption this year than the same person was last year.
The second thing worth knowing is that the rule does not work on a year. It works on the period the accommodation was occupied. Somebody who moved from Pune to Nashik in August spent five months on 50 per cent and seven on 40, and those are two separate calculations added together. Almost every calculator online takes one set of annual figures, which is fine until anything changes mid-year, and something usually does.
The third is the regime. None of this exists for an employee on the default regime, and the default is where people land unless they opt out. So the first question is not how much rent somebody pays, it is which regime they are on, and for a good share of your staff the honest answer to the whole calculation is nil.
This file was built on the Income-tax Act 2025, which replaced the 1961 Act on 1 April 2026, and on the Rules notified under it in March. The figures were read from the gazette rather than from summaries of it, which mattered: much of the commentary still describes the eight cities as a draft proposal. It sits alongside our Form 12BB template and the leave encashment calculator, both rebuilt on the same Act.
Preview
Four situations, four different answers
The same rent can produce a full exemption or none at all. What decides it is the city, the regime and how the rent compares with the pay.
- Each row shows what the exemption depends on and which sheet in the file works it out.
- The sample file has five employees, each chosen to make one rule visible rather than to look tidy.
- Every figure was checked by recalculating the workbook and comparing it against arithmetic worked out by hand.
| Situation | City rate | Regime | Exemption | Why | Sheet |
|---|---|---|---|---|---|
| Renting in Bengaluru | 50% | Old | Yes | Added to the list this year | 03 |
| Renting in Nashik | 40% | Old | Yes | Not one of the eight | 03 |
| Renting anywhere | Either | New | Nil | Default regime allows none | 04 |
| Rent under a tenth of pay | Either | Old | Nil | Second amount goes negative | 03 |
| All four | Covered | 03/04 |
Key stats
Three numbers that changed this year
3 amounts, least wins
HRA received, rent minus a tenth of salary, and the city share. The smallest is what comes off the tax.
Source: Income-tax Rules 2026, Rule 279(1)Nil on the default regime
HRA exemption only exists if the employee has opted out. On the default regime the answer is zero, whatever the rent.
Source: Income-tax Act 2025, s.202; opt out under s.202(4)
Common mistakes
6 HRA Exemption Mistakes Indian Employers Make
Still using the four-city list
Bengaluru, Hyderabad, Pune and Ahmedabad moved to 50 per cent on 1 April 2026. A spreadsheet carried over from last year gives those employees 40, which understates the exemption and over-deducts their tax.
One calculation for the whole year
The rule works on the period the accommodation was occupied. Any change of city, rent or salary splits the year, and an annual average quietly produces a figure that matches no period at all.
Forgetting to ask about the regime
There is no HRA exemption on the default regime. Applying one anyway means the TDS is short, and the shortfall is the employer's problem before it is the employee's.
Letting the rent limb go negative
When rent is small next to pay, rent minus a tenth of salary is a negative number. The exemption is nil. A sheet that does not floor it can produce a negative exemption that increases taxable salary.
Missing the landlord's PAN
Once the year's rent passes one lakh, the employee has to give you the landlord's name, address and PAN on Form No. 124. Without it the exemption should not be given through payroll at all.
Putting every allowance into salary
Salary for this calculation is basic plus dearness allowance. Other allowances and perquisites are excluded, so building it off gross pay inflates both the ten per cent deduction and the city share. Turnover commission is the unsettled one: the old rule counted it and the new one does not mention it. The file has a switch for it, off by default, so you can act on what your CA says.
Comparison
What the free ones get wrong
A calculator you find online
One box, one answer
- Four metro cities, the pre-2026 list
- One annual calculation for the whole year
- Silent when the rent limb goes negative
- Never asks which tax regime
- One employee at a time
Free either way
This calculator
Six sheets, whole team
- All eight cities, from the notified rule
- One row per period, added up per person
- Flags a negative rent limb and floors it at nil
- Asks first, and zeroes the default regime
- Thirty employees, sixty periods
Get the free calculator
Six sheets, thirty employees, all eight cities. Short form, instant download.
FAQ
Common questions
Is this HRA calculator really free? +
Yes, completely. No card and no trial. The form asks for your name, work email, phone and city, then the file downloads straight away. The Attendo team may follow up about payroll software, and you are free to say no thanks.
Which cities get the 50% HRA exemption now? +
Eight. Mumbai, Kolkata, Delhi and Chennai as before, plus Hyderabad, Pune, Ahmedabad and Bengaluru, which were added when the Income-tax Rules 2026 came into force on 1 April 2026. Everywhere else stays at 40 per cent. Most calculators still show only the original four, which understates the exemption for anyone in the four new ones.
How is HRA exemption calculated? +
It is the least of three amounts: the HRA actually received, the rent paid minus one tenth of salary, and either 50 or 40 per cent of salary depending on the city. Salary here means basic pay plus dearness allowance. If the second amount comes out negative, which happens when the rent is small next to the pay, the exemption is nil rather than a negative figure.
Can HRA be claimed under the new tax regime? +
No. The exemption only exists for someone who has opted out of the default regime. Since the default gives no HRA exemption at all, the first thing to establish is which regime the employee is on, because everything else follows from it. The calculator asks for it on the employee sheet and zeroes anyone on the default.
What happens if an employee moves city during the year? +
The rule works on the period the accommodation was occupied, so each stretch is worked out separately and the results are added. Somebody who moves from Pune to Nashik in August gets 50 per cent for the first five months and 40 per cent for the remaining seven. Running one annual calculation gets this wrong, which is why the file takes one row per period rather than one per person. It works in whole months, so split a period differently if a part month changes the figure much.
A
About Attendo
Attendo, formerly Petpooja Payroll, is payroll and attendance software used by more than 40,000 businesses in India. It keeps each employee's regime choice and rent declaration on file, so exemptions come out of the record rather than a spreadsheet. See what it does, or browse all the free HR templates.
Attendo
Get HRA right in payroll
Regime and rent held per employee. The exemption follows on its own.
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Call: +91 72280 34343