Can I Claim HRA in the New Tax Regime?
Can I Claim HRA in the New Tax Regime?
Updated for FY 2024–25 | AY 2025–26
If you're a salaried employee living in a rented house, you're probably familiar with House Rent Allowance (HRA)—a popular tax exemption that reduces your taxable income. But with the government promoting the New Tax Regime, many people are asking:
“Can I claim HRA exemption under the New Tax Regime?”
Here’s a clear and updated answer.
❌ No, HRA Exemption Is Not Allowed Under the New Tax Regime
Under the New Tax Regime (Section 115BAC), most deductions and exemptions—including HRA—are not permitted.
This means:
• Even if your salary includes an HRA component,
• And even if you live in a rented house,
➡️ You cannot claim HRA exemption if you opt for the New Regime.
✅ What Is Allowed in the New Tax Regime?
While HRA and most deductions are disallowed, you can still claim:
• Standard Deduction of ₹50,000 (for salaried & pensioners)
• Employer’s NPS Contribution under Section 80CCD(2)
• EPF (Employer part only) – if auto-deducted from salary
• Transport allowance for specially-abled employees
• Income from life insurance maturity (under Section 10) if otherwise exempt
📊 Old vs New Regime – HRA Applicability
| Feature | Old Tax Regime | New Tax Regime |
| HRA Exemption | ✅ Allowed | ❌ Not Allowed |
| 80C, 80D, etc. | ✅ Allowed | ❌ Not Allowed |
| Standard Deduction | ✅ Allowed | ✅ Allowed |
| Ideal For | Tax savers | Simplifiers |
🧾 Example: How HRA Works (Old Regime Only)
Let’s say:
• Basic Salary = ₹40,000/month
• HRA received = ₹20,000/month
• Rent paid = ₹25,000/month
• City: Metro
HRA Exemption = Least of the following:
1. Actual HRA received = ₹2,40,000/year
2. 50% of salary (metro) = ₹2,40,000
3. Rent – 10% of salary = ₹1,80,000
✅ HRA exemption = ₹1,80,000
❌ Not allowed in the New Regime
💡 Should I Switch to the New Regime?
Only if:
• You don’t claim many deductions
• You’re not paying rent or have minimal exemptions
• Your income is below ₹7 lakh (zero tax due to rebate)
If you're paying high rent and your employer gives HRA, the Old Regime is often more beneficial.
Final Words
❌ You cannot claim HRA in the New Tax Regime.
✅ HRA exemption is only available under the Old Tax Regime.
So, if you’re a salaried individual staying on rent and relying on HRA to save tax, carefully evaluate before opting for the new regime during ITR filing or in Form 10-IE.
