HRA Tax Guide - Old vs New Regime

House Rent Allowance (HRA) Guide

Strategic Tax Planning: Old vs. New Tax Regime

Deciding between the Old and New tax regimes is a critical move for salaried professionals in India. While one offers flexibility through deductions, the other promises simplicity with lower rates.

The Regime Face-Off

Feature Old Tax Regime New Tax Regime
HRA Exemption Available under Sec 10(13A) Not Available (Fully Taxable)
Tax Rates Higher slab rates Lower, concessional rates
Deductions Allows 80C, 80D, HRA, etc. Minimal/No deductions

How HRA is Calculated (Old Regime)

Your exemption is the lowest of these three amounts:

  • The actual HRA received from your employer.
  • Actual rent paid minus 10% of your basic salary.
  • 50% of salary (Metros) or 40% of salary (Non-Metros).

Compliance Checklist

To claim HRA successfully, ensure you have:

  • Valid Rent Receipts and a signed Rental Agreement.
  • Digital footprints of payment (UPI/Bank Transfer).
  • The Landlord's PAN (Mandatory if annual rent exceeds ₹1 lakh).

Final Verdict

Choose the Old Regime if you pay high rent in a metro city and utilize investment deductions. Choose the New Regime if your rent is minimal and you prefer a simplified, "paperless" tax filing experience.