On a monthly basic of ₹28,000, the tax-free part of your house rent allowance depends on the rent you pay and whether you live in a metro. The table works it out for both, assuming HRA received of ₹14,000 (50% of basic).
| Monthly rent paid | Exempt (metro, 50%) | Exempt (non-metro, 40%) |
|---|---|---|
| ₹5,600 | ₹2,800 | ₹2,800 |
| ₹8,400 | ₹5,600 | ₹5,600 |
| ₹11,200 | ₹8,400 | ₹8,400 |
| ₹14,000 | ₹11,200 | ₹11,200 |
| ₹16,800 | ₹14,000 | ₹11,200 |
Under Section 10(13A) of the old tax regime, the exempt HRA is the least of three amounts: the HRA your employer actually pays, the rent you pay minus 10% of basic, and 50% of basic for metro cities (40% for non-metro). On ₹28,000 basic that means the metro cap is ₹14,000 and the non-metro cap is ₹11,200. Whatever is left after taking the least of the three is added to your taxable salary.
Two conditions matter: you must actually pay rent (keep receipts and the agreement), and HRA exemption is not available under the new tax regime. If your annual rent crosses ₹1,00,000 you must report the landlord's PAN. For your own HRA received and rent, use the HRA calculator.
One number worth knowing on ₹28,000 basic is the break-even rent. Because the second test is rent minus 10% of basic, you get no exemption at all until your rent crosses ₹2,800 a month, which is 10% of basic. Below that, the "rent minus 10% of basic" figure is zero or negative and the exemption collapses to nil. Above it, the exemption climbs with rent until it is capped at ₹14,000 in a metro (reached at a rent of ₹16,800) or ₹11,200 outside a metro. That is why two colleagues on the same ₹28,000 basic can have very different tax-free HRA purely from where and how much they rent.
If you are choosing between the old and new tax regimes, this exemption is often the deciding factor. A tenant paying substantial rent in a metro can shield a large slice of salary through HRA under the old regime, which the new regime does not allow. Run both regimes on your full package before you opt, because the HRA saving on ₹28,000 basic can outweigh the new regime's lower slab rates.