Is Bengaluru a metro city for HRA in 2026-27?

Yes. From 1 April 2026, Rule 279 of the Income-tax Rules 2026 gives Bengaluru the 50% HRA limb, alongside Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune and Ahmedabad; before that it was 40%. It applies only under the old regime. On example inputs of ₹60,000 basic, ₹30,000 HRA and ₹40,000 rent a month, the exemption rises by ₹72,000 a year.

What the rule says

The HRA exemption is the least of three amounts, worked out for the period you occupy the rented home during the tax year. From tax year 2026-27 the provision is Schedule III, Table Sl. No. 11 of the Income-tax Act 2025, and the three amounts are set by Rule 279(1) of the Income-tax Rules 2026, notified by the Central Board of Direct Taxes as Notification No. 22/2026 (G.S.R. 198(E), dated 20 March 2026) and in force from 1 April 2026.

The third amount, Rule 279(1)(c), is a share of salary that depends on where the accommodation is. The rule’s table gives 50% of salary for "Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru." and 40% for "Any other place." The other two amounts are the HRA actually received and the rent paid minus one-tenth of salary.

Rule 279(2) defines salary for this purpose: it includes dearness allowance where the terms of employment provide for it, and excludes all other allowances and perquisites. In practice that is basic plus DA, the same base payslips have always used.

Exempt = least of (HRA received, rent − 10% of basic+DA, 50% or 40% of basic+DA)

The four cities that moved from 40% to 50%

Under Rule 2A of the Income-tax Rules 1962, which applied up to the year ended 31 March 2026, only Delhi, Mumbai, Kolkata and Chennai earned the 50% limb. Rule 279 keeps those four and adds Hyderabad, Pune, Ahmedabad and Bengaluru. For a renter in any of the four added cities, the cap on the third limb rises by a tenth of basic plus DA.

Every place the rule does not name stays at 40%. That includes Gurugram, Noida, Navi Mumbai and Thane, however closely they are tied to a named city. The rule names cities and does not define their limits, so for a home on the edge of one, the employer’s payroll treatment is usually where the question is settled first.

The change only matters where the third limb is the smallest of the three. If the rent minus 10% of basic, or the HRA itself, is already lower than 40% of basic, the exemption is the same in Bengaluru as anywhere else.

A worked example in Bengaluru

Example inputs, not a typical salary: basic plus DA of ₹60,000 a month, HRA of ₹30,000 a month and rent of ₹40,000 a month in Bengaluru. The three limbs are ₹30,000 of HRA received, ₹34,000 of rent minus 10% of basic, and a share of basic that is ₹24,000 at 40% or ₹30,000 at 50%.

At 40% the exemption is ₹24,000 a month, ₹2,88,000 a year. At 50% it is the full ₹30,000 a month, ₹3,60,000 a year. The difference is ₹6,000 a month, or ₹72,000 a year of HRA that is no longer taxed as salary.

Put that on an example gross salary of ₹14,40,000 with the full ₹1,50,000 under Section 80C claimed. Old-regime tax is ₹1,07,016 at the 40% figure and ₹92,040 at the 50% figure, a difference of ₹14,976 for the year. The new regime on the same gross is ₹88,140, with no HRA exemption at all, so on these example inputs the new regime is still the lower figure; on other salaries and deductions the order can reverse.

Only the old regime, and only from 1 April 2026

Section 202 of the Income-tax Act 2025 withdraws the HRA exemption for anyone taxed under the new regime, so the eight-city list changes nothing for a salary on the new regime. It matters only to someone on the old regime, or comparing the two.

The rule took effect on 1 April 2026 and applies from tax year 2026-27. The return for the year ended 31 March 2026 is still worked under the 1961 Act and Rule 2A, where Bengaluru, Hyderabad, Pune and Ahmedabad remain at 40%.

What your employer asks for

From tax year 2026-27, the rent you declare to your employer goes on Form No. 124 under Rule 205 of the Income-tax Rules 2026. It asks for the "Name, address and Permanent Account Number of the landlord or landlords, where the aggregate rent paid during the tax year exceeds ₹ 100000 and relationship with the landlord, if any." Rent receipts and proof of payment sit alongside it.

Payroll systems updated at different times. If early months of 2026-27 were run at 40% for a Bengaluru renter, the rule itself still applies to the whole period occupied in the tax year, and the difference can be reflected in later TDS or in the return.