HRA Metro Cities 2026: Bengaluru, Pune, Hyderabad, Ahmedabad Get 50%
From tax year 2026-27, HRA exemption uses 50% of salary in eight cities, including Bengaluru and Pune. See the new list, worked examples and what to enter.
The short answer
From 1 April 2026 (tax year 2026-27 onwards), the 50% limit in the HRA exemption formula applies to eight cities: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Every other place still uses 40%. This comes from Rule 279 of the Income-tax Rules, 2026, published on the Income Tax Department's website. If you live and work in one of the four newly added cities, choose the Metro (50% of salary) option in the HRA Calculator even though the hint under the buttons still lists only the original four cities.
HRA exemption is still an old tax regime benefit. Under the new regime, HRA you receive is fully taxable, so this change only matters if you choose the old regime.
What changed, and from when
Until 31 March 2026, HRA was governed by Section 10(13A) of the Income-tax Act, 1961 and Rule 2A. Only Delhi, Mumbai, Kolkata and Chennai counted as "metro" cities for the 50% limit. Bengaluru, Hyderabad, Pune and Ahmedabad used 40%, which surprised many people who live in those cities.
The Income-tax Act, 2025 and the Income-tax Rules, 2026 took effect on 1 April 2026. Rule 279 keeps the same three-part formula but lists eight places for the 50% figure:
| Place of residence | Limit 2 (share of salary) |
|---|---|
| Mumbai, Kolkata, Delhi, Chennai | 50% (unchanged) |
| Hyderabad, Pune, Ahmedabad, Bengaluru | 50% (new from 1 April 2026) |
| Any other place | 40% |
Which year does this affect? It applies to salary and rent from 1 April 2026 onwards, that is, tax year 2026-27. For financial year 2025-26 (the return you file in 2026), the old list of four cities still applies. If you are checking a Form 16 for 2025-26, a Bengaluru employer using 40% is correct.
The formula is still "least of three"
Your exempt HRA is the lowest of these three amounts for the period you rented:
Whatever is left over after the exemption is taxable. "Salary" here means basic pay plus dearness allowance where your terms of employment provide for it. It does not include other allowances or perquisites. So a high CTC with a small basic salary gives a small HRA exemption, whatever city you live in.
The new list changes only limit 2. If limit 1 or limit 3 is already the lowest, moving from 40% to 50% makes no difference to you.
Example 1: the new rule helps
Priya lives in Bengaluru. Her monthly figures:
- Basic salary: ₹40,000 (no DA)
- HRA received: ₹20,000
- Rent paid: ₹25,000
| Limit | Old rule (40%) | New rule (50%) |
|---|---|---|
| 1. HRA received | ₹20,000 | ₹20,000 |
| 2. Share of salary | ₹16,000 | ₹20,000 |
| 3. Rent minus 10% of salary | ₹21,000 | ₹21,000 |
| Exempt HRA (lowest) | ₹16,000 | ₹20,000 |
Her exempt HRA rises from ₹1,92,000 to ₹2,40,000 a year, so ₹48,000 less of her income is taxed. If her income falls in the 30% slab of the old regime, that saves about ₹14,976 a year (₹48,000 × 30%, plus 4% cess). In a lower slab the saving is smaller.
Example 2: the new rule changes nothing
Arjun lives in Pune:
- Basic salary: ₹50,000 (no DA)
- HRA received: ₹25,000
- Rent paid: ₹20,000
Limit 1 is ₹25,000. Limit 2 is ₹20,000 at 40% or ₹25,000 at 50%. Limit 3 is ₹20,000 − ₹5,000 = ₹15,000. Limit 3 is the lowest in both cases, so his exemption stays at ₹15,000 a month. To benefit, he would need to pay more rent, not live in a different city.
This is why it is worth running your own numbers instead of assuming the change helps everyone.
How to check your HRA with the calculator
The calculator works month by month. If your rent or salary changed during the year, run it once for each period and add the results.
"Bengaluru" means where you live, not where your employer is registered
Rule 279 ties the percentage to where your rented home is. Some situations people ask about:
- You live in Gurugram or Noida and work in Delhi. Gurugram and Noida are not on the list, so 40% applies.
- You live in Navi Mumbai or Thane. These are separate cities from Mumbai. Ask your employer how they treat them, and keep your rent agreement handy. If in doubt, 40% is the conservative figure.
- You moved from Kochi to Bengaluru mid-year. Use 40% for the months in Kochi and 50% for the months in Bengaluru.
What your employer will ask for
The new rules also change paperwork. Form 124 replaces the old Form 12BB for declaring HRA, investments and deductions to your employer. According to reported summaries of the Rules, if the total rent you pay in the year is more than ₹1,00,000, you need to give your landlord's name, address and PAN, and also state your relationship with the landlord, if any. Keep rent receipts and the rent agreement. The Rent Receipt Generator can produce monthly receipts for your landlord to sign.
Should you switch to the old regime for this?
Not automatically. The larger 50% limit makes the old regime more attractive for some renters in the four new cities, but the new regime has lower slab rates and a higher rebate. Compare total tax under both regimes, including your other deductions, before deciding. The Income Tax Calculator can help you compare.
Common mistakes
- Using the new list for 2025-26. The eight-city list starts with tax year 2026-27.
- Entering CTC or gross salary as "salary". Use basic pay plus eligible DA only.
- Assuming the new rule always raises your exemption. If rent minus 10% of salary is the lowest limit, nothing changes.
- Forgetting the 10% deduction in limit 3. Rent of ₹15,000 on a ₹40,000 basic counts as only ₹11,000 for the formula.
- Claiming HRA in the new regime. It is not available there.
For more on the three limits and older worked examples, see How Much of Your HRA Is Tax-Free?. Note that its city list describes the rules before 1 April 2026.
This guide explains the general rules and is not tax advice.
Frequently asked questions
Which cities get 50% HRA from 2026?
From 1 April 2026, Rule 279 of the Income-tax Rules, 2026 lists Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru for the 50% limit. All other places use 40%.
Is Bengaluru a metro city for HRA in 2025-26?
No. For financial year 2025-26 the old rules apply, and only Delhi, Mumbai, Kolkata and Chennai use 50%. Bengaluru gets 50% from tax year 2026-27.
Will my HRA exemption increase automatically if I live in Pune?
Only if the 40% limit was the lowest of the three limits. If rent minus 10% of salary or the HRA you receive is lower, your exemption does not change.
Can I claim HRA under the new tax regime?
No. HRA exemption is available only under the old tax regime. Under the new regime the HRA you receive is taxable.
Put this guide into practice with our free online tool — no signup required.
Open tool