How to Claim HRA in ITR in New Tax Regime for FY 2024-2025?

Rajesh Kumar Kar
Feb 24
7 min read

Updated: Apr 17

House Rent Allowance (HRA) is a common and significant component in the salary structure of most salaried employees. It offers considerable tax savings for those living in rented accommodation, but only under the old tax regime. With the advent of the new tax regime, introduced in FY 2020-21 and further revised in FY 2023-24, several exemptions and deductions, including HRA, have been removed. This shift has created confusion among taxpayers about whether and how HRA can be claimed in the Income Tax Return (ITR) when opting for the new regime.

Let’s break down the current rules, eligibility, tax treatment, and the correct method to report HRA in your ITR for the assessment year 2025–26, depending on the tax regime you choose.

Why You Cannot Claim HRA in ITR in New Tax Regime

Key Changes in HRA Treatment

Can You Claim HRA in ITR Under the New Tax Regime?

Step-by-Step Process to Claim HRA in ITR Under the New Tax Regime

Alternative: Claiming Rent Deduction Under Section 80GG

Conclusion

Most Asked Questions

Why You Cannot Claim HRA in ITR in New Tax Regime

The new tax regime offers simplified tax slabs with lower rates but comes at the cost of forgoing major exemptions and deductions, including HRA. This means:

If you opt for the new tax regime, you cannot claim any exemption on the HRA component of your salary.
The full amount of HRA received will be taxable as part of your salary income.

Key Changes in HRA Treatment:

Feature	Old Tax Regime	New Tax Regime
HRA Exemption	Available under Section 10(13A)	Not available
Claiming Rent Deduction (without HRA)	Section 80GG available	Section 80GG available
Eligibility for HRA	Must receive HRA from employer and live in rented house	Not applicable. HRA fully taxable
Claiming Other Deductions (80C, 80D, etc.)	Allowed	Not allowed (except standard deduction and a few limited ones)

Important Notes:

Salaried individuals who choose the new regime cannot claim deductions under Section 80C, 80D, 24(b), or exemptions like HRA and LTA.
However, self-employed taxpayers or salaried individuals who do not receive HRA can still claim rent paid under Section 80GG, if they meet the required conditions.

Can You Claim HRA in ITR Under the New Tax Regime?

The simple answer is No. HRA exemption is not permitted under the new tax regime.

But here are the possibilities depending on your situation:

If you opt for the old tax regime: You can claim HRA exemption under Section 10(13A), provided you live in a rented house and your salary structure includes an HRA component.

If you opt for the new tax regime: You cannot claim any HRA exemption. The HRA received will be fully taxable, and there is no relief under this regime for salaried individuals receiving HRA.

If you do not receive HRA but pay rent: You may be eligible for a deduction under Section 80GG, applicable under both regimes, subject to specific conditions such as:
- You live in rented accommodation
- You do not receive HRA
- Your total income is below ₹10 lakh

Step-by-Step Process to Claim HRA in ITR Under the New Tax Regime

Even though HRA exemption is not available under the new tax regime, it is still important to report the HRA component accurately while filing your Income Tax Return (ITR). Incorrect reporting can lead to mismatches in your TDS data and potential notices from the Income Tax Department.

Reporting HRA Under the New Tax Regime

Follow these steps to correctly file ITR if you are opting for the new regime:

Step 1: Choose the Correct Tax Regime

While preparing your ITR, you must select between the old tax regime and the new tax regime.
If you opt for the new tax regime, you will not be eligible to claim HRA exemption.
If claiming HRA is essential for your tax savings, you should instead opt for the old tax regime while filing.

Step 2: Gather Salary Details from Form 16

Obtain Form 16 issued by your employer. It will contain the detailed breakup of your salary, including the HRA component.
Under the new regime, the HRA shown in Form 16 is fully taxable and forms part of your gross salary.

Step 3: Report HRA as Taxable Income

While filling in the 'Income Details' section of your ITR, include the entire HRA amount as part of your taxable salary.
No separate exemption or deduction is to be entered for HRA under the new regime.

Step 4: Verify TDS in Form 16 and Form 26AS

Match the TDS on salary reported in Form 16 with Form 26AS to ensure there are no mismatches.
If your employer has incorrectly allowed HRA exemption under the new regime, ask for a corrected Form 16 before filing your return.

Step 5: Submit and Verify Your Return

After completing all salary and tax details, preview the final tax liability and proceed with submission.
Complete e-verification through any of the available options such as Aadhaar OTP, net banking, or Digital Signature Certificate (DSC).

Claiming HRA Exemption Under the Old Tax Regime

If you opt for the old tax regime, you can claim HRA exemption under Section 10(13A), subject to certain documentation and eligibility conditions.

Step 1: Collect Supporting Documents

Ensure you have:

Rent receipts for the relevant financial year
Rental agreement with landlord
PAN of the landlord (mandatory if annual rent exceeds ₹1 lakh)

Also, check Form 16 for the HRA component included in your salary.

Step 2: Calculate the Eligible HRA Exemption

As per Section 10(13A), the HRA exemption is the lowest of the following three:

Actual HRA received from the employer
50% of basic salary (for metro cities) or 40% (for non-metros)
Rent paid minus 10% of basic salary

You can use an HRA calculator or compute manually before filing.

Step 3: Report the Exempt HRA in ITR

While filling the ITR, enter the exempt portion of HRA under the ‘Exempt Allowances’ section.
The remaining salary after exempting HRA will be considered for tax computation.

Step 4: Verify TDS in Form 16 and 26AS

Confirm that the exempt HRA reported in Form 16 matches the figure you're entering in your ITR.
Reconcile the TDS with Form 26AS and rectify discrepancies (if any) before filing.

Step 5: File and Claim Refund (If Applicable)

If excess TDS was deducted due to partial HRA exemption or incorrect computation, you may be eligible for a refund.
Complete your return submission and e-verification using Aadhaar OTP, net banking, or DSC.

Alternative: Claiming Rent Deduction Under Section 80GG

If you are not receiving HRA from your employer but are living in rented accommodation and paying rent, you may still be able to claim a deduction under Section 80GG — and this applies under both the old and new tax regimes.

This provision is especially helpful for:

Freelancers or self-employed professionals
Salaried individuals whose employers do not provide HRA

Conditions to Claim Deduction under Section 80GG:

To be eligible, you must meet all of the following:

You are paying rent for a residential accommodation occupied by you.
You do not receive HRA as part of your salary.
You or your spouse or minor child do not own any residential property at the place where you reside or work.
You file Form 10BA along with your ITR to declare that you meet these conditions.
Your total income does not exceed ₹10,00,000 in a financial year.

Maximum Deduction Allowed:

The deduction under Section 80GG is the lowest of the following:

₹5,000 per month (i.e., ₹60,000 annually)
25% of total income (excluding long-term capital gains, short-term capital gains under section 111A, and income under Section 115A or 115D)
Actual rent paid minus 10% of total income

Note: This deduction is available even under the new tax regime, making it a valuable option for those not eligible for HRA exemption.

Conclusion

If you opt for the new tax regime, HRA exemption under Section 10(13A) is not available, and any HRA received will be fully taxable. This is a crucial factor for salaried individuals who live in rented homes and rely on HRA to lower their tax burden.

However, if you do not receive HRA but still pay rent, Section 80GG offers a valuable alternative for rent deduction, available under both tax regimes.

Before filing your ITR, it is strongly advisable to compare your total tax liability under both regimes using a tax calculator or professional advice. Opt for the regime that maximizes your tax savings based on your salary structure, deductions, and exemptions.

FAQs

1. Can I claim HRA while filing ITR under the new tax regime?

No, HRA exemption is not allowed under the new tax regime. The entire amount received as HRA will be included in your taxable salary and taxed accordingly.

2. Can I switch between the old and new tax regimes?

Yes, salaried individuals can switch between the regimes each financial year while filing their ITR. However, those with business or professional income must follow restrictions: once the new regime is opted for, they cannot revert to the old one in subsequent years.

3. Is there any alternative way to claim rent deduction under the new tax regime?

Yes, if you are not receiving HRA but paying rent, you may claim a deduction under Section 80GG, subject to specific eligibility conditions.

4. What happens if I mistakenly claim HRA exemption under the new tax regime?

Such a claim would be considered incorrect. Your return may be flagged for mismatch or error, and you may be liable to pay additional tax along with interest or penalties.

5. Is there any benefit in opting for the new tax regime if I receive HRA?

The new tax regime offers lower slab rates, but removes exemptions like HRA. If your total exemptions and deductions are high, the old tax regime may still be more beneficial.

6. How do I check if my employer has deducted TDS on HRA correctly?

Verify the HRA component and TDS amount in your Form 16 and cross-check it with Form 26AS. Any mismatch should be reported to your employer for correction.

7. Does the new tax regime provide any alternative tax benefits for salaried employees?

Yes, the new regime offers a higher standard deduction of ₹75,000 (as per Budget 2023 updates), but eliminates most traditional exemptions like HRA, LTA, and deductions under 80C.

8. Can self-employed individuals claim any rent deductions?

Yes. Self-employed individuals are not eligible for HRA but can claim a deduction for rent paid under Section 80GG, provided they meet the eligibility criteria and file Form 10BA.

9. Should I opt for the new tax regime if I receive HRA?

It depends on your overall deductions. If you receive HRA and also claim 80C, 80D, and home loan benefits, the old tax regime might offer more savings.

10. What is the penalty for not declaring HRA properly under the new tax regime?

If HRA is declared incorrectly (e.g., claimed under the new regime), you may face tax notices, reassessment, interest, or penalties for incorrect income reporting.