Good News: Government Plans Bigger HRA Tax Relief For Pune, Bengaluru And Other Key Cities
Proposal may extend 50% house rent allowance exemption beyond four metros under old tax regime
Salaried employees living in India’s biggest urban centres could soon get a major tax break, with the government planning to expand the scope of House Rent Allowance (HRA) exemption under the old tax regime.
At present, taxpayers residing in only four metro cities namely Mumbai, Delhi, Kolkata and Chennai can claim an HRA exemption of up to 50% of their salary. Employees living in all other cities are limited to a 40% exemption.
Now, the government is considering extending the higher 50% exemption to four additional major cities: Bengaluru, Hyderabad, Pune and Ahmedabad. If implemented, the move would bring significant relief to working professionals facing steep rental costs in these fast-growing economic hubs.
Under the proposed structure, the revised HRA exemption limits would be:
50% of salary for residential accommodation in Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru
40% of salary for residential accommodation in all other locations
The proposal reflects the government’s attempt to modernise HRA provisions in line with shifting urban demographics and sharply rising housing rents. Over the past decade, cities like Pune, Bengaluru and Hyderabad have emerged as major technology, manufacturing and services centres, drawing large workforces and driving up residential demand.
For many salaried employees, HRA remains one of the most important tax-saving tools available under the old tax regime. The benefit is especially relevant for those who continue to claim exemptions and deductions, unlike the new tax regime where most exemptions including HRA, are not permitted.
If approved, the expansion would provide additional savings for professionals renting homes in these newly included cities, aligning tax relief with the realities of India’s evolving metro landscape.
The proposal is still under consideration, and employees will have to wait for an official notification before the revised exemption structure comes into force.
