You might be owed a bigger HRA deduction

HRA exemption has always used the lowest of three amounts, and one of those three depended on which city you live in: 50% of salary in the four original metros (Delhi, Mumbai, Kolkata, Chennai), or 40% everywhere else. From 1 April 2026, that list has grown to eight cities — Bengaluru, Pune, Hyderabad, and Ahmedabad now also qualify for the 50% rate, under the new Income Tax Rules, 2026.

This only helps if that "50%/40% of salary" limb was actually the smallest of the three in your case — which usually happens when your rent is high relative to your salary. If your exemption was already capped by actual rent paid or actual HRA received, the city upgrade won't change your number. And it applies only if you're on the old tax regime; the new regime doesn't allow HRA exemption at all, regardless of city.

Who this affects: salaried employees living in Bengaluru, Pune, Hyderabad, or Ahmedabad who are on the old tax regime and pay rent that's high relative to their basic salary. It does not help residents of Gurgaon, Noida, or Surat — despite being major employment hubs, none of them made the expanded list.

What to do: get the timing right. This applies only to income earned from 1 April 2026 onward. If you're filing your FY 2025-26 return (due 31 July 2026), you're still bound by the old 4-city rule. Also check with your employer's payroll from your April 2026 salary onward — many payroll systems haven't yet been updated to apply the new rate automatically.