HRA Arrears Calculator

Calculate HRA exemption on salary arrears year by year. Updated for New Income Tax Rules 2026 — 8 cities now at 50% exemption. Includes Section 89(1) relief guide.

8 Cities50% HRA Exemption
Sec 10(13A)HRA Exemption
Sec 89(1)Arrears Relief
Apr 2026New IT Rules

HRA Arrears Calculator

Add each arrear period separately — HRA exemption is always calculated year by year

City Type
Metro / 8 Cities (50% HRA) — From Apr 2026Non-Metro / Other Cities (40% HRA)
Metro: Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad, Ahmedabad
Tax Regime
Old Tax Regime (HRA exemption applicable)New Tax Regime (HRA fully taxable)
HRA exemption u/s 10(13A) is only for Old Regime

📅 Arrear Periods

＋ Add Period
Period
Basic + DA (₹/mo)
HRA Received (₹/mo)
Rent Paid (₹/mo)
Months
💡 How to fill: Add one row per pay revision period. E.g., if arrears span Jan 2023 – Mar 2024 with a mid-revision, add two rows. Enter the monthly figures — the calculator multiplies by months automatically.
⚡ Calculate HRA Arrears Exemption

⚠️ New Tax Regime Selected: HRA exemption under Section 10(13A) is NOT available under the New Tax Regime. Your entire HRA arrears of ₹0 will be fully taxable. Consider switching to the Old Regime if HRA exemption is beneficial for you.
📊 HRA Arrears Breakdown — Period by Period

Total HRA Arrears Received—
Total Exempt HRA (Old Regime)—
✅ Total Tax-Free HRA Arrears—
⚠️ Total Taxable HRA Arrears—
📋 Section 89(1) Relief Applicable?—

HRA Rules & Arrears Guide 2026

Complete reference for Section 10(13A) exemption and salary arrears — updated for New Income Tax Rules 2026

🆕New Income Tax Rules 2026 — HRA Changes Effective Apr 1, 2026

50% Cities Expanded

8 Metro Cities Now at 50%

From April 1, 2026, the 50% HRA exemption extends to Bengaluru, Pune, Hyderabad, and Ahmedabad in addition to Delhi, Mumbai, Chennai, and Kolkata. Total: 8 cities at 50%.

Form 124

Landlord Disclosure Mandatory

Form 12BB is replaced by Form 124. You must now disclose if the landlord is a relative. Rent payments to spouse remain ineligible for HRA exemption.

PAN Requirement

PAN Mandatory Above ₹1 Lakh

If annual rent exceeds ₹1,00,000 (₹8,333/month), landlord’s PAN must be disclosed. Stricter digital verification now in place via AIS/26AS matching.

New Regime

No HRA Exemption in New Regime

Under the New Tax Regime (default from FY 2023-24), HRA is fully taxable. Section 10(13A) exemption is only available to those who explicitly opt for the Old Tax Regime.

🧮HRA Exemption Formula — Section 10(13A)

The exempt HRA is the lowest of these three amounts — calculated separately for each financial year:

Amount 1

Actual HRA Received

HRA paid by employerAs per salary slip / Form 16
Amount 2

% of Basic + DA

50% (Metro) / 40% (Non-Metro)
× (Basic + DA)Annual figure for the period
Amount 3

Actual Rent – 10% Salary

Annual Rent Paid
− 10% of (Basic + DA)Zero if rent < 10% of Basic+DA
Arrears Rule: For salary arrears spanning multiple years, you must calculate HRA exemption separately for each financial year at the salary and rent figures applicable to that year. You cannot club all arrears and apply a single year’s figures.

🏙️HRA City Classification 2026

Important for Arrears: If your arrears cover periods before April 1, 2026 and you were in Bengaluru, Pune, Hyderabad, or Ahmedabad, use 40% for those periods and 50% only from April 2026 onwards. The calculator handles this — just add separate rows for each period.

🛡️Section 89(1) Relief on HRA Arrears

When taxable HRA arrears push you into a higher tax slab in the year of receipt, Section 89(1) provides relief to avoid excess tax burden.

1

Calculate Tax Without Arrears: Compute your income tax for the current year excluding the HRA arrears amount.

2

Calculate Tax With Arrears: Add the full taxable HRA arrears to current year income. Note the additional tax.

3

Spread Arrears to Prior Years: Apportion taxable HRA arrears back to the financial years they relate to. Compute tax for each prior year with and without that year’s arrear share.

4

Calculate Relief: Relief = Tax computed in Step 2 (excess tax in current year) minus Tax that would have been paid in prior years. File Form 10E online on the Income Tax portal before filing ITR.

5

Claim in ITR: Enter the Section 89(1) relief amount in your ITR under Relief u/s 89. Failure to file Form 10E first will result in the relief being disallowed.

⚠️ File Form 10E First: You must file Form 10E on the IT portal before submitting your ITR to claim Section 89(1) relief. If ITR is filed without Form 10E, the relief will be disallowed and a demand notice may be issued.

📋When Do HRA Arrears Arise?

Pay Commission

Pay Revision / CPC

Government employees receiving arrears after a Pay Commission revision (e.g., 7th CPC) — HRA component of arrears must be calculated for each prior year separately.

Bipartite

Bank / PSU Settlements

Bank employees receiving arrears under Bipartite Settlements (e.g., 12th BPS). HRA arrears span the settlement retroactive period, often 16–18 months.

Court Order

Legal / Tribunal Orders

Salary restoration after a court or labour tribunal order. Arrears may span years and include an HRA component that needs year-wise exemption calculation.

Salary Revision

Private Sector Revision

Delayed salary corrections, promotions with retrospective effect, or rectification of pay anomalies — all generate HRA arrears that need period-by-period exemption workings.

🔄Old Regime vs New Regime — HRA Treatment

📘 How to Use the HRA Arrears Calculator

Start by choosing the city category and tax regime that apply to the arrear period you want to model. Then add one row for every period in which Basic + DA, HRA received, rent paid or the number of months remained constant.

Each row should represent a clean block of months. If salary was revised mid-year or the employee changed city, split the arrears into separate rows so the calculator can apply the correct percentage and rent figures period by period.

The calculator multiplies the monthly values by the number of months entered, applies the three-rule HRA exemption test for each row, and then totals exempt and taxable HRA across all periods.

For a standard non-arrears HRA check, use the HRA Exemption Calculator. For current Government HRA payable by city category, use the HRA Calculator.

🗓️ Why HRA Arrears Should Be Split Period by Period

Arrears often span months with different salary or rent conditions. A pay revision can change Basic + DA, a transfer can change city category, and a rent revision can change Rule 3 even when salary stays the same.

Using one average figure for a long arrear period can hide these changes and produce an exemption that does not reflect the actual historical periods.

A safer workflow is to create one row for each stable period, label it clearly, enter the monthly figures that applied then, and enter the exact month count.

This month-block approach also makes the results table easier to audit because every exempt and taxable amount can be traced back to one defined period.

📐 How the Three HRA Rules Apply to Arrears

For each period, Amount 1 is the actual HRA received for those months. Amount 2 is the city-based percentage of Basic + DA for the same months. Amount 3 is rent paid minus 10% of Basic + DA.

Under the Old Regime path on this page, the exemption is the lowest of these three values for that period. The taxable amount is the balance of HRA received after subtracting the exemption.

Under the New Regime path, the calculator sets the exemption to zero and treats the whole HRA arrear amount as taxable according to the source logic.

The period table therefore shows not just total HRA, but also the salary-based ceiling, rent-based ceiling, exempt amount, taxable amount and a simple status for each row.

💰 Getting Basic + DA Right

The Basic + DA field is the foundation of both Amount 2 and Amount 3. Enter the monthly salary base that applied during that historical period rather than the employee’s current Basic Pay.

If DA changed during the arrear span, split the rows at the effective date. A single row with the latest DA for earlier months can overstate both the percentage ceiling and the 10% threshold.

Use the DA Calculator when you need to verify a historical DA component separately, and the Salary Breakup Calculator when the Basic/allowance structure needs clarification.

For pay-commission revisions, keep the old and revised pay orders together with the arrear calculation so the historical Basic + DA can be reconstructed later.

🏙️ City Category and Arrear Periods

City category affects the salary-percentage rule. The source page models a higher percentage for the Metro option and a lower percentage for Non-Metro.

If an employee changed residence category during the arrear period, create separate rows for the months before and after the move. Do not use one city selection for the full period unless the classification genuinely remained unchanged.

For Government payroll HRA by X/Y/Z city class, use the dedicated HRA city tools. The tax-exemption city percentage in this arrears page is a separate concept from payroll HRA rates.

A clear period label such as “Apr–Sep 2025” or “Oct 2025–Mar 2026” makes later verification much easier than a generic label such as “Period 1”.

🏠 Rent Paid and Historical Evidence

Rule 3 depends on actual rent paid during each arrear period. Enter the rent that applied then, not today’s rent.

If rent changed during the year, split the calculation into separate rows. This prevents a higher later rent from being applied backward to earlier months.

Keep rent receipts, agreement details and payment evidence for the periods being claimed. Arrears calculations are retrospective, so documentary support is especially useful if the claim is reviewed later.

Where landlord details or PAN are required under the rules represented in the source page, keep those records with the period calculation and salary documentation.

⚖️ Old vs New Regime in the Arrears Calculator

The tax-regime selector changes the exemption treatment, not the gross HRA arrear amount itself. Under Old Regime, the calculator applies the three-rule exemption. Under New Regime, the source logic treats the entire HRA arrear as taxable.

A useful comparison method is to run the same set of arrear rows once under Old Regime and once under New Regime without changing the salary or rent inputs.

This shows the HRA exemption difference, but it does not replace a full income-tax comparison because other deductions, slab rates and rebates can also affect the final tax outcome.

For broader take-home and tax-regime comparison, use the Gross vs Net Salary Calculator after calculating the exempt portion here.

🛡️ Section 89(1) Relief: How to Interpret the Result

The page flags Section 89(1) whenever there is a taxable arrear portion. This is a planning prompt rather than a complete relief calculation.

Relief depends on comparing the tax impact of receiving arrears now with the tax that would have applied if the income had been received in the years to which it relates. That requires year-wise income-tax calculations beyond the HRA exemption alone.

Use the period-by-period taxable HRA totals from this page as an input to a broader arrears-relief working. Keep each financial year clearly separated so the income can be apportioned correctly.

The page’s guidance also references Form 10E for claiming relief. Store the HRA arrears table with the broader salary-arrears records so all inputs remain traceable.

📊 Reading the Period-by-Period Results Table

The results table gives one line per arrear block. Total HRA shows the HRA paid for those months, the next columns show the salary-percentage and rent-based limits, and the final columns show exempt versus taxable HRA.

If a period is marked Part Taxable, compare Amount 2 and Amount 3 to see which ceiling is pulling the exemption below the HRA received.

The footer totals all periods and is the best place to capture the final tax-free and taxable HRA figures for further tax planning.

Do not judge the whole arrear claim from one row alone. A period can be fully exempt while another period in the same arrears payment is partly taxable.

🧾 HRA Arrears from Pay Revision, BPS or Court Orders

The source page lists pay-commission revisions, bank or PSU settlements, legal orders and private-sector salary corrections as common reasons for HRA arrears.

In each case, the key task is the same: identify the months to which the arrears belong, reconstruct the salary and rent figures for those months, then apply the HRA exemption rules to each period.

For Government pay-revision history, the CPC Comparison Guide can help provide structural context, while this page remains focused on the HRA component.

For other types of salary arrears, the DA Arrears Month-wise Calculator can be used separately when DA is part of the retrospective adjustment.

📂 Documents to Keep with an HRA Arrears Working

Keep the arrear statement or employer calculation showing the months covered, revised salary figures and HRA component.

Store the relevant historical payslips, rent receipts, rent agreement, transfer or promotion orders and any pay-revision order that changed Basic + DA.

If Section 89(1) is later claimed, keep the year-wise taxable arrear allocation with the tax working used for relief.

A saved copy of the calculator result is most useful when each row label matches the same periods used in the supporting documents.

⚠️ Common HRA Arrears Calculator Mistakes

A common mistake is entering the total lump-sum arrears into one row. The calculator is designed around monthly figures and a month count for each historical period.

Another mistake is using current Basic + DA for all prior periods. Salary and DA may have changed during the arrear span and should be split accordingly.

Users may also forget to split a transfer between city categories or a rent change into separate rows, which can distort the exemption.

Finally, the Section 89(1) flag is not the relief amount. It only indicates that taxable arrears may need a separate year-wise tax-relief calculation.

✅ HRA Arrears Verification Checklist

Before accepting the result, confirm city type, tax regime and every arrear row label, Basic + DA, HRA received, rent paid and month count.

Then review the period-wise exempt and taxable amounts and verify the footer totals.

If the employer or tax working differs, identify the first period where salary, rent, city type or months do not match before changing the final total manually.

Keep the final table with historical salary and rent records so later Section 89(1), Form 10E or ITR review can be reproduced accurately.

Frequently Asked Questions

HRA arrears exemption rules, Section 89(1) relief, and new 2026 rules explained

Can I claim HRA exemption on salary arrears received in lump sum?
▾
Yes, but the exemption must be computed year by year — not on the total lump sum. For each financial year to which the arrears relate, you separately calculate the HRA exemption using that year’s Basic+DA, rent paid, and HRA received. The total exempt amount across all years is deducted from your taxable income. The balance taxable HRA arrears may qualify for Section 89(1) relief to prevent higher taxation in the year of receipt.
Which cities get 50% HRA exemption from April 2026?
▾
Under the New Income Tax Rules 2026 (effective April 1, 2026), the following 8 cities qualify for 50% HRA exemption: Delhi, Mumbai, Chennai, Kolkata (existing metros) plus the newly added Bengaluru, Pune, Hyderabad, and Ahmedabad. All other cities continue at 40%. This means employees in Bengaluru, Pune, Hyderabad, and Ahmedabad will get a significantly higher HRA exemption from FY 2026-27 onwards. For arrear periods before April 1, 2026, these four cities still use 40%.
What is Section 89(1) relief and when should I claim it?
▾
Section 89(1) provides tax relief when salary arrears (including taxable HRA arrears) received in one year push you into a higher tax bracket than what you would have paid had the income been received in the year it was due. You claim this by filing Form 10E online on the Income Tax portal before submitting your ITR. The relief equals the extra tax paid due to bunching of income. It is especially relevant for large arrears spanning 2 or more years. Important: Form 10E must be filed before ITR, or the relief is disallowed.
Do I need rent receipts for HRA arrears from past years?
▾
Yes. To claim HRA exemption on arrears for past years, you need to prove actual rent paid for those periods. Maintain rent receipts, rent agreements, and bank statements showing rent transfers for all relevant past periods. If the landlord’s annual rent exceeded ₹1,00,000, their PAN must also be available. Without these documents, the Assessing Officer may disallow the exemption and treat the full HRA arrears as taxable during scrutiny or assessment.
Are HRA arrears from 7th Pay Commission or Bank BPS taxable?
▾
The HRA component of pay commission or bipartite settlement arrears is not automatically tax-free. You must calculate the HRA exemption for each year of the arrear period separately using Section 10(13A). Any amount above the calculated exemption limit is taxable. However, since these arrears often relate to multiple prior years, Section 89(1) relief can reduce the tax burden significantly. Bank employees receiving 12th BPS arrears (November 2022 onwards) should compute exemption year by year.
Can I pay rent to my parents and claim HRA exemption on arrears?
▾
Yes, you can pay rent to your parents and claim HRA exemption, provided the arrangement is genuine — a formal rent agreement should exist, rent should be transferred via bank, and the parents must show it as rental income in their own ITR. However, under the New IT Rules 2026, this relationship must now be disclosed in Form 124. You cannot pay rent to your spouse or minor child and claim HRA exemption — this is explicitly disallowed under Indian tax law.
What if I was living in my own house during the arrear period?
▾
If you owned and lived in your own house during the arrear period, you are not eligible for HRA exemption for those months — even if your employer paid HRA as part of your salary. The HRA received for months when you lived in your own property is fully taxable. Only HRA corresponding to periods when you were genuinely paying rent is eligible for exemption. You must apportion the arrears accordingly and apply exemption only to the rent-paying months.
How do I show HRA arrears exemption in my ITR?
▾
In your ITR (typically ITR-1 or ITR-2), the exempt HRA is reported under “Allowances to the extent exempt u/s 10”. The total HRA received (including arrears) must first be included under Salary as per Section 17(1), and then the exempt portion is deducted under Section 10. If Form 16 is available, it should reflect this split. For Section 89(1) relief on taxable arrears, file Form 10E first and then claim the relief in the ITR under Relief u/s 89.
Is HRA exemption available if I don’t receive HRA but pay rent?
▾
If you don’t receive HRA from your employer but pay rent, you can claim a deduction under Section 80GG (available only in the Old Tax Regime). The 80GG deduction is the lowest of: 25% of total income, ₹5,000/month (₹60,000/year), or actual rent paid minus 10% of total income. This is not applicable for HRA arrears situations but is relevant if your employer doesn’t provide HRA at all. Section 80GG is not available if you or your spouse/minor child owns residential property.
What is Form 124 and how does it replace Form 12BB?
▾
Under the New Income Tax Rules 2026 (effective April 1, 2026), Form 12BB (declaration of investments and rent for TDS reduction) has been replaced by Form 124. The key addition in Form 124 is the mandatory disclosure of the relationship between you and your landlord. If the landlord is a relative, you must declare this explicitly. This is to curb fraudulent HRA claims where rent is shown to relatives without actual payment. Submit Form 124 to your employer at the start of each financial year or when there is a change in rental details.
Disclaimer: This calculator provides estimates based on Section 10(13A) of the Income Tax Act and the New Income Tax Rules 2026. City classifications for the 50% rate are effective from April 1, 2026. For personalised tax advice on HRA arrears and Section 89(1) relief, consult a Chartered Accountant or visit incometax.gov.in.