HRA Exemption in ITR Filing 2026: Why HRA Is Not Showing in ITR and How to Claim It Correctly?

HRA Exemption in ITR Filing 2026: Why HRA Is Not Showing in ITR and How to Claim It Correctly?

Introduction

Many salaried taxpayers face a common issue while filing their Income Tax Return (ITR). They open the ITR-1 form, start entering salary details as per Form 16, and when they move to the allowances section, they are unable to find the HRA option in the list. Since HRA exemption helps reduce taxable income, this creates confusion for taxpayers living in rented accommodation.

In most cases, the issue is not with the ITR utility itself. The actual reason is the tax regime selected by the taxpayer. HRA exemption is strictly not allowed under the new tax regime. Therefore, if the taxpayer has selected the new regime, the HRA option may not appear while filing the return.

Understanding how HRA works, who is eligible, and how it should be reported correctly in the ITR is important to avoid incorrect claims and future notices from the Income Tax Department.

Main Discussion

House Rent Allowance (HRA) is a salary allowance available to salaried individuals who receive HRA as part of their salary structure. However, this exemption is available only under the old tax regime.

Under the new tax regime, most deductions, exemptions, and allowances are disallowed, including HRA exemption. This is the primary reason why many taxpayers do not see the HRA option in the allowances list while filing the return.

Practically, many taxpayers directly begin entering salary details from Form 16 without checking which tax regime is selected. In several cases, the new regime remains selected by default, and taxpayers overlook it.

To claim HRA exemption, the taxpayer must first go to the personal information tab and select the old tax regime. Once the old regime is selected and saved, the HRA option under Section 10(13A) becomes visible in the salary allowances section.

Both tax regimes have separate advantages.

The new regime provides lower slab rates and rebate benefits. On the other hand, the old regime allows taxpayers to claim deductions, exemptions, and salary-related allowances such as:

• HRA exemption
• Chapter VI-A deductions
• Salary exemptions and allowances

Therefore, every taxpayer should compare both regimes carefully to determine which one provides greater tax benefit in their case.

Another important practical point is that the entire HRA received does not automatically become exempt. The exemption amount is calculated using a prescribed formula.

HRA exemption is calculated based on the least of the following:

• Actual HRA received
• Rent paid minus 10% of salary
• 50% of salary in case of metro cities
• 40% of salary in case of non-metro cities

For this calculation, salary generally means basic salary plus dearness allowance (DA).

The discussion also highlighted the metro city criteria relevant for HRA computation. Traditionally, Delhi, Mumbai, Kolkata, and Chennai are treated as metro cities. The updated practical discussion further referred to Pune, Ahmedabad, Hyderabad, and Bengaluru in the FY 2025-26 context.

While filing the HRA schedule in the ITR utility, taxpayers are required to enter:

• Place of residence
• Basic salary
• Dearness allowance
• Actual HRA received
• Actual rent paid
• Applicable percentage of salary

The utility contains auto-calculated grey cells and manually fillable white cells. Once the correct details are entered, the exempt HRA amount is calculated automatically.

For example, if a taxpayer receives annual HRA of ₹1,00,000 and pays annual rent of ₹1,20,000, the entire HRA may still not become exempt because the exemption is strictly formula based.

Practical Impact

This discussion is highly important from a practical compliance perspective because even a small mistake can create future tax issues.

Important practical points include:

• HRA exemption is available only under the old tax regime.
• If the HRA option is not visible, taxpayers should first verify the selected regime.
• Salary details should match Form 16 and employer records.
• Unsupported HRA claims should be avoided.
• Mismatch between employer reporting and ITR details may trigger notices.

A common mistake made by taxpayers is manually claiming HRA in the ITR even when the employer has not considered the exemption in Form 16. Such mismatches may lead to notices from the Income Tax Department.

Therefore, taxpayers should make HRA claims carefully and maintain proper rent documentation and supporting records.

Conclusion

HRA exemption continues to be one of the most valuable tax-saving benefits for salaried individuals living in rented accommodation. However, this benefit is available only if the taxpayer opts for the old tax regime.

Many taxpayers face confusion during ITR filing simply because they do not pay attention to the selected regime. Proper regime selection, accurate calculation, and matching salary details with Form 16 are essential for compliant tax filing.

Before filing the return, taxpayers should compare both tax regimes carefully and select the option that provides maximum legitimate tax benefit.

Key Takeaways

• HRA exemption is not available under the new tax regime.
• HRA may not appear in the ITR utility if the wrong regime is selected.
• HRA exemption is calculated using a prescribed formula.
• Metro and non-metro classification impacts exemption computation.
• Salary for HRA calculation generally includes basic salary and DA.
• Incorrect claims or Form 16 mismatches may lead to income tax notices.

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