HRA Exemption in Bengaluru, Hyderabad, Pune & Ahmedabad
By Varun M
Four cities got reclassified as metro for HRA purposes — but the upgrade doesn't raise everyone's exemption. Whether it changes your number depends on which of the three limbs was already binding.
HRA Exemption Calculator
Toggle between FY 2025-26 and FY 2026-27 to see the difference for your own numbers.
The short answer
From FY 2026-27, Bengaluru, Hyderabad, Pune, and Ahmedabad use 50% of salary instead of 40% for HRA exemption — joining Delhi, Mumbai, Kolkata, and Chennai. But HRA exemption is the lowest of three limbs, so raising just one of them doesn't always change your final number.
Four scenarios below, each earning its own worked numbers — not the same rule restated four times.
Bengaluru — where the upgrade delivers a real gain
Basic + DA ₹60,000/month, HRA received ₹35,000/month, rent ₹32,000/month:
- Limb 1 (HRA received): ₹35,000
- Limb 2 (rent − 10% of salary): ₹32,000 − ₹6,000 = ₹26,000
- Limb 3, old (40%): ₹24,000 → Limb 3, new (50%): ₹30,000
Old-rule exemption: min(₹35,000, ₹26,000, ₹24,000) = ₹24,000/month. New-rule exemption: min(₹35,000, ₹26,000, ₹30,000) = ₹26,000/month. A real gain of ₹2,000/month (₹24,000/year) — here, the salary-based limb was already the binding constraint, so raising it directly raises the exemption.
Hyderabad — where it changes nothing, because rent is the binding limb
Basic + DA ₹55,000/month, HRA received ₹25,000/month, rent ₹20,000/month:
- Limb 1: ₹25,000
- Limb 2: ₹20,000 − ₹5,500 = ₹14,500
- Limb 3, old (40%): ₹22,000 → Limb 3, new (50%): ₹27,500
Both old and new: min(₹25,000, ₹14,500, ₹22,000 or ₹27,500) = ₹14,500/month either way. Rent relative to salary is modest enough that the rent-based limb was already the lowest — the metro upgrade never even comes into play.
Pune — where it changes nothing, for a different reason entirely
Basic + DA ₹50,000/month, HRA received ₹15,000/month (a lean HRA allocation), rent ₹30,000/month:
- Limb 1: ₹15,000
- Limb 2: ₹30,000 − ₹5,000 = ₹25,000
- Limb 3, old (40%): ₹20,000 → Limb 3, new (50%): ₹25,000
Both old and new: min(₹15,000, ₹25,000, ₹20,000 or ₹25,000) = ₹15,000/month, capped by actual HRA received. No amount of raising the statutory percentage helps if your employer simply isn't paying you enough HRA to reach it in the first place.
Ahmedabad — a smaller salary, but a real gain
Basic + DA ₹30,000/month, HRA received ₹15,000/month, rent ₹16,000/month:
- Limb 1: ₹15,000
- Limb 2: ₹16,000 − ₹3,000 = ₹13,000
- Limb 3, old (40%): ₹12,000 → Limb 3, new (50%): ₹15,000
Old-rule exemption: min(₹15,000, ₹13,000, ₹12,000) = ₹12,000/month. New-rule exemption: min(₹15,000, ₹13,000, ₹15,000) = ₹13,000/month. A gain of ₹1,000/month (₹12,000/year) — proportionally meaningful at this income level, showing the upgrade isn't just a high-earner benefit if your rent-to-salary ratio lines up.
The pattern across all four
The metro reclassification only helps if the salary-based limb (40%/50%) was already your binding constraint. If your actual HRA received, or your rent relative to salary, was already lower than even the old 40% figure, moving that figure to 50% changes nothing for you — regardless of which of these four cities you're in. Run your own numbers on the HRA Exemption Calculator rather than assuming the upgrade automatically means more money in your pocket.
Still the FY 2025-26 4-city list for last year's filing
If you're filing your FY 2025-26 return (including a belated return), these four cities are still non-metro (40%) for that filing year — the 50% rate only applies from FY 2026-27 onward. Use the calculator's financial-year toggle to switch between the two.
Related reading
- HRA: rent paid to parents — a different limb of the same three-way-minimum calculation.
- HRA exemption without rent receipts — the documentation thresholds that apply regardless of which city you're in.
- Section 80GG: rent deduction without HRA — the fallback if your salary has no HRA component at all.
FAQ
Yes, from FY 2026-27 (1 April 2026 onwards) — they join Delhi, Mumbai, Kolkata, and Chennai on the 50%-of-salary list, up from the 40% non-metro rate. For FY 2025-26 filings, the old 4-city list still applies to these four.
Not automatically. HRA exemption is the LOWEST of three limbs — actual HRA received, rent minus 10% of salary, and 50%/40% of salary. The metro upgrade only raises the third limb. If either of the other two limbs was already lower than even the old 40% figure, the upgrade changes nothing for you — see the worked examples on this page.
People whose rent (relative to salary) is high enough that the 40%-of-salary limb was already the binding constraint before the change — for them, raising it to 50% directly increases the exempt amount. People capped by their actual HRA received, or by a lower rent, see no change at all.
The rule itself is identical across all four — 50% of salary from FY 2026-27. Whether it helps you in practice depends on your own salary, HRA, and rent figures, not which of the four cities you're in specifically.
Use the HRA Exemption Calculator directly — select FY 2026-27 and your city, and it shows all three limbs plus which one is binding for you.
Last verified: 14 Aug 2026
Source: Income-tax Rules, 2026 (Notification No. 22/2026, G.S.R. 198(E), dated 20 Mar 2026), Rule 279, effective 1 Apr 2026.
This is indicative information. Confirm your exact exemption with a qualified tax professional before filing or making financial decisions.