Explainer: Draft Income-Tax Rules 2026 to expand HRA relief, tighten scrutiny on rent claims, FTC, audit disclosures
Currently, salaried employees residing in Mumbai, Delhi, Kolkata and Chennai can claim HRA exemption of up to 50% of salary under the old tax regime. For other cities, the limit is capped at 40%. The draft rules propose adding Bengaluru, Hyderabad, Pune and Ahmedabad to the 50% category, recognising their rising rental costs and status as major employment hubs. Employees elsewhere will continue under the 40% ceiling.
Currently, salaried employees residing in Mumbai, Delhi, Kolkata and Chennai can claim HRA exemption of up to 50% of salary under the old tax regime. For other cities, the limit is capped at 40%. The draft rules propose adding Bengaluru, Hyderabad, Pune and Ahmedabad to the 50% category, recognising their rising rental costs and status as major employment hubs. Employees elsewhere will continue under the 40% ceiling.
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