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Feb 09, 2026
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Good news for taxpayers in old tax regime: Higher HRA benefits extended to these new cities in new draft Income Tax Rules, 2026
Taxpayers residing in cities like Bengaluru, Hyderabad, Pune and Ahmedabad in rented accommodations are set to get significant tax relief as the government has proposed the expansion of 50% house rent allowance (HRA) exemption under the old tax regime.
Currently, the cities where taxpayers under the old tax regime can enjoy up to a 50% exemption on HRA are Mumbai, New Delhi, Kolkata and Chennai.
According to the draft new Income Tax Rules, 2026, for all other cities across India, the HRA exemption will be 40%.
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