Salary class lottery started! Now you will get the benefit of 50% HRA discount in these 4 cities also, more money will come in your pocket

From April 1, 2026, good days have come for employed people. The Central Board of Direct Taxes (CBDT) has made a revolutionary change in the ‘Income Tax Rules, 2026’, which will directly increase your in-hand salary. The government has now increased the scope of tax exemption on House Rent Allowance (HRA) from 4 metros to 8 cities. This simply means that now your taxable income will be less and you will see a huge increase in the ‘take-home’ salary coming into your bank account every month.

Now 50% claim opportunity will be available in these 4 new cities also

The old rule that has been in place for decades has now become history. Earlier, only employees living in Delhi, Mumbai, Kolkata and Chennai could claim 50% of their basic salary as HRA exemption, whereas for other cities this limit was only 40%. But now Bengaluru, Hyderabad, Pune and Ahmedabad have also been included in this ‘exclusive club’. The government has taken this historic decision in view of the huge increase in rents in these cities in the last few years. Being IT hubs and major business centres, the cost of living in these cities has now reached at par with the old metros.

Tax burden will reduce, spending power will increase

When you are able to show half of your basic salary as rent expense, your total taxable income will come down significantly. Lower taxes will leave the middle class with more cash to fight inflation. Economic experts believe that this decision will not only provide relief to the employees, but will also give a new impetus to the rental housing market of these 8 major cities. The economy is also expected to accelerate as people’s spending power increases.

‘Double bonanza’ for those in the old tax system

Government’s kindness is not limited to HRA only. If you file returns under the old tax regime, then a box of happiness has opened for you. The limit of tax exemption on children’s education and hostel allowance has been increased. Apart from this, huge tax relief has also been given on facilities like food coupons or free food received from office. For those who are planning to send children abroad or travel abroad themselves, TCS rates have been cut, making foreign tours now fitting into your budget.

Crackdown will be tightened on fraudsters

On one hand, the government has opened the doors of relaxation, on the other hand it has also increased the strictness regarding the rules. Now HRA claims will be investigated at a micro level through advanced technology and data mining. The government aims to crack down on those who resort to fake rent agreements or fake receipts to save tax. Therefore, it has now become extremely important to maintain transparency of documents along with availing the benefits of exemptions.