Which cities get the higher HRA exemption — eight, not four

Which cities count as metro for HRA?

Strictly, none of them, because “metro” is not a word the rule uses. What rule 279 has is a table with two rows and a column headed “Location of residential accommodation”. Accommodation in a place named in the first row takes the higher share of salary. Everything else takes the lower one. These are the two rows, as the Gazette prints them.

That share is not the exemption. It is the third of three limits, and the exemption is the least of them — the allowance you actually receive, the rent you pay less one-tenth of salary, and this share. Which of the three binds is the whole question for a given payslip, and it is why the answer below is a real number for some readers in Hyderabad and nothing at all for others.

“Salary” here is the rule’s own word and it is narrower than a payslip: sub-rule (2) says it includes dearness allowance, if provided for under the terms of employment, but excludes all other allowances and perquisites. And the whole computation runs over the “relevant period”, which means the period during which the said accommodation was occupied by the assessee during the tax year — so a part year is a smaller figure, not a pro-rated one.

Why did nobody notice?

Because the cities have never been in the Act, and neither have the percentages. Checking the statute is the careful thing to do and it will not show you this change. Here is the whole chain, each link quoted from the instrument itself.

The load-bearing words are in the second link: the allowance is exempt “to such extent as may be prescribed having regard to the area or place”. The Act hands the city question to whoever writes the Rules and then says nothing more about it. So a notification can move four of the largest salaried populations in the country from one share to the other, and every word of the Act it is made under stays exactly as it was. Our section mapper carries the same exemption under its erstwhile number, if you arrived here from a page citing the repealed Act.

Where the four came from

From Income-tax Rules, 1962 — rule 2A, which prescribed the limits for the purposes of the erstwhile section 10(13A) of the Income-tax Act, 1961, which the Income-tax Act, 2025 repealed. Its heading — “Limits for the purposes of the erstwhile section 10(13A)” — is where this page has put a word of its own, and that is disclosed below rather than left to be noticed. The rule did the same job in the same shape as rule 279 does now: least of three, with the third turning on where you live. It named its places like this.

“where such accommodation is situate at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period”

“where such accommodation is situate at any other place, two-fifth of the amount of salary due to the assessee in respect of the relevant period”

Income-tax Rules, 1962 — rule 2A · Limits for the purposes of the erstwhile section 10(13A) · the Department’s own rule text, as captured 11 October 2025

Three of the four are named in rule 2A by names those cities no longer carry, and the rule was never re-drafted to follow the renamings. So the four-city list that every explainer reproduces in modern spellings is a modernisation of the text rather than a quotation of it — which is a small thing on its own, and a useful one to know about a list people cite as though they had read it.

The rule’s own heading does not carry the word “erstwhile”. We insert it, immediately before the section number, and record here that we did: this site marks every retired section number at the point the number appears — the same treatment the Form 16 guide gives them — and a heading of the repealed Rules quoted bare would read on our page as a live citation to a repealed Act. Nothing else in the heading is ours.

The rule text is the Income Tax Department’s own, from its rule viewer on incometaxindia.gov.in. We cite the Internet Archive’s capture of that page rather than the page itself because the live host refused every request we made to it on 10 August 2026 with an edge-level 403, from two different clients. The capture is dated 11 October 2025 — before the 2026 Rules were notified — which is the state we want anyway: rule 2A as it stood while it still governed.

What the change is worth, in each place that moved

Computed below by the engine behind our HRA exemption calculator, run twice for every cell: once on the list rule 279 carries and once on the list it replaced. The figure is the extra exemption for a whole tax year, and it is nil wherever a different limit was already the least of the three.

The four rows are identical, and that is the finding rather than a shortcut. Rule 279 names all eight places in one row of one table, so the rule draws no distinction between Hyderabad and Pune and neither can any arithmetic built on it. Rents differ enormously between these cities; the share does not. If a future notification ever splits them, this page stops building rather than going on saying so.

The last column is the one worth reading twice. At basic and dearness allowance of ₹30,000 a month, a house-rent allowance of ₹15,000, rent of ₹14,000, the longer list is worth ₹0 — because the rent limit was already the smallest of the three, and raising a ceiling does not lift a figure that was never touching it. That is the difference between a reader in Hyderabad planning around a number and planning around nothing, and it is why the calculator this page ends at asks which limit is deciding your figure rather than only what the figure is.

The same thing, worked

One pay shape, all three limits, before and after. basic and dearness allowance of ₹50,000 a month, a house-rent allowance of ₹25,000, rent of ₹28,000, in Hyderabad.

₹36,000 a year more of the same allowance escapes tax, and the reason is visible in the table rather than asserted under it: the city limit was the smallest of the three and is not any more. What that is worth in rupees of tax depends on your slab and on which regime you are taxed under, which the old vs new regime advisor answers and this page does not.

Will this be worth anything to me at all?

Only if you are taxed under the old rates. The fourth link in the chain above is Income-tax Act 2025, s.202(2)(a)(i), and it strikes the Schedule III entry the house-rent allowance is exempt under — Income-tax Act 2025, s.11 read with Schedule III (Table: Sl. No. 11) — out of the computation entirely. The default is the new regime. So for a large share of the people this page is written for, the answer to “which cities count” is genuinely “it does not matter, and here is why”, and saying that plainly seems better than letting somebody work out a figure they cannot use.

What if my employer’s payroll is still on the old four?

Then it is withholding more tax each month than the year’s liability, and that is the whole of what it is doing. It is worth being precise about the two things this separates, because they are routinely run together.

• What the payroll decides is the estimate the monthly deduction is computed on, under Income-tax Act 2025, s.392(1). Rule 205, Income-tax Rules 2026 is the provision under which the particulars of a claim are furnished to the employer, in Form No. 124: “ The assessee shall furnish to the person responsible for making payment under section 392(1), the evidence or the particulars of the claims referred to in sub-rule (2) in Form No. 124, for the purpose of estimating his income or for computing the tax required to be deducted at source.” The Table in that rule lists the particulars for each claim, and the row for house rent allowance reads “ 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.”
• What the payroll does not decide is the exemption. The allowance is exempt to the extent rule 279 prescribes, and the difference between what was withheld and what is owed is settled in the return.

What the employer does with the city list decides how much tax is withheld each month, and nothing else. The exemption itself is a matter for the return: the allowance is exempt because rule 279 says it is, not because a payroll system agreed. A payroll running the old list withholds more tax than the year’s liability, and the difference is a larger refund rather than a lost exemption. This is a description of the machinery and not a recommendation about what to do with it.

Who is still publishing the old list?

We read eleven pages that answer this question on 10 August 2026 at 18:01 IST. Every page below was fetched in full on the date and at the time recorded here and read for one thing: which cities it tells a reader get the higher share. The verdicts are counted off this list and nothing else, so the counts on the page are a count of an enumerated set rather than an impression of a search result. Every page is named below, on both sides of the line.

A page that says “metro” and stops was serviceable while the list had not moved for decades and every reader already believed they knew it. It stopped being serviceable on 20 March 2026, because the four places where the answer changed are exactly the four a reader cannot resolve from the word.

The pages that had already updated are worth naming too, and not out of politeness: ClearTax, BankBazaar, TaxGuru. The information reached everybody who went looking for it. The whole difficulty is in knowing there was something to look for.

Below are four passages from three of the pages still on the old list, quoted verbatim, with the date and time we read each one. They are here rather than summarised because a claim that somebody else has this wrong is worth exactly as much as the reader’s ability to check it.

What are we still unsure about?

Published beside the claims rather than kept in a note, because a page about somebody else’s confidence owes a reader its own.

• The rule text is not in doubt at all. Rule 279 was read in the notified Rules as published in the The Gazette of India: Extraordinary, Part II—Section 3(i), at printed page 1776, on 10 August 2026 — along with rule 1(2) for commencement and the G.S.R. 198(E) notification on the file’s own first page. So were Income-tax Act, 2025 — Schedule III (See section 11), Table Sl. No. 11 and Income-tax Act 2025, s.202(2)(a)(i), in the enacted Act in the Gazette.
• The rule this one replaced is quoted from an archive, and that is a real caveat. The text is the Income Tax Department’s own, from its rule viewer; the copy we could actually read is the Internet Archive’s capture of 11 October 2025, because the live host refused every request we made to it. An archive of a government page is not a government page, and we would rather say so than let a citation look tidier than it is.
• The survey is a survey and not a census. It is eleven pages, named, read on one afternoon. It says nothing about how many pages exist, and a page that was on the old list at 18:01 IST may have been corrected since. If one has been, we delete the quotation rather than softening it, and say on this page that it was corrected.
• The Rules are made under Income-tax Act 2025, s.533, which is the rule-making power, and the exemption itself is under Income-tax Act 2025, s.11 read with Schedule III (Table: Sl. No. 11). Those are two different citations for two different things and a good deal of writing about this change runs them together.

Where do I check my own numbers?

Put your basic, your allowance and your rent into our HRA exemption calculator. It runs the same three limits this page works above, tells you which of the three is deciding your figure — the thing that actually determines whether paying more rent would help you — and, for the four places rule 279 added, prints the difference the longer list makes to you rather than to an example.

Whether the regime that allows the exemption at all is the one that costs you less is a different question, and the old vs new regime advisor answers it. Our section mapper answers which section of the repealed Income-tax Act, 1961 became which section of the Income-tax Act, 2025, which is the other half of every page still citing the old numbers for this exemption. What we read, when we last read it, and where we are still unsure is on the methodology page.