Plan HRA claims for Bengaluru rent and salary structures.
What Changed
The Income-tax Rules, 2026, in force from 1 April 2026, added Bengaluru, Hyderabad, Pune and Ahmedabad to the original four metros of Delhi, Mumbai, Kolkata and Chennai for the 50% limit. Other cities stay at 40%.
The change affects only the city limit in the HRA formula, so it helps when 40% of basic used to be the lowest of the three limits.
HRA Inputs
Collect basic salary, HRA received, monthly rent and rent-paid months.
Use the 50% city setting for Bengaluru from Tax Year 2026–27; earlier years used the 40% limit.
The exemption is the lowest of HRA received, rent paid minus 10% of basic, and 50% of basic. Salary here means basic plus dearness allowance where it counts for retirement benefits.
A Worked Example
Take basic of ₹50,000 a month (₹6 lakh a year), HRA of ₹25,000 a month (₹3 lakh) and rent of ₹30,000 a month (₹3.6 lakh). Rent minus 10% of basic is ₹3 lakh and 50% of basic is ₹3 lakh, so the full ₹3 lakh of HRA is exempt.
At the old 40% limit, the cap would have been ₹2.4 lakh, leaving ₹60,000 taxable. On a ₹15 lakh salary with 80C, 80D and professional tax, the higher limit cuts old-regime tax from ₹1,27,171 to ₹1,11,301, but the new regime at ₹97,500 is still lower in this case.
If the rent were ₹25,000 a month instead, rent minus 10% of basic would be ₹2.4 lakh. That would be the lowest limit under both the old and new city rules, so the change would make no difference to the exemption.
Proofs
Keep rent receipts, rent agreement, payment proof and landlord PAN where required.
Proof rules are often employer-specific.
If your rent includes a separate maintenance charge, claim only the rent you pay the landlord under the agreement. A security deposit is not rent and doesn't count toward HRA.
Regime Check
HRA usually matters under the old regime, so compare against the new regime before deciding.
HRA can't be claimed in the new regime, so the 50% limit matters only if the old regime wins overall. If you pay rent and also have a home loan, the old regime can allow both in some cases, such as when the house you own is in another city.
Use the HRA Calculator with the 50% city option, the Rent Receipt Generator for monthly receipts, and the Income Tax Calculator to see which regime comes out lower.