HRA exemption: Hyderabad, Pune, Ahmedabad and Bengaluru join the 50% list under the Income-tax Rules, 2026

What rule 279 says

Rule 279 of the Income-tax Rules, 2026 fixes the amount of the special allowance for rent — the house rent allowance referred to in Schedule III [Table: Sl. No. 11] of the Income-tax Act, 2025 — that is not included in total income. It is the least of three amounts:

1. the actual allowance received for the relevant period;
2. the rent actually paid for the residential accommodation, minus one-tenth of the salary for the relevant period; and
3. a percentage of salary that depends on where the accommodation is.

The places in the 50% row

Under rule 2A of the Income-tax Rules, 1962, the 50% row named only the four cities of Bombay, Calcutta, Delhi and Madras. Hyderabad, Pune, Ahmedabad and Bengaluru are the additions.

Two definitions to apply correctly

• Relevant period — the period during which the accommodation was occupied by the assessee during the tax year.
• Salary — includes dearness allowance if the terms of employment provide for it, but excludes all other allowances and perquisites.

What the employer will ask for

Under rule 205, an employee gives the employer the evidence of claims in Form No. 124. For house rent allowance, the rule asks for the name, address and PAN of the landlord or landlords where the aggregate rent paid during the tax year exceeds ₹1,00,000, and the relationship with the landlord, if any.

From when

The Income-tax Rules, 2026 came into force on 1 April 2026, so rule 279 governs salary of tax year 2026-27 onwards. Whether an employee can claim the exemption at all also depends on the tax regime that applies to him or her; this story covers only the limits in the rule.