The notification of new Income Tax Rules that come into force from April 1, 2026 brings good news for tax-payers from Hyderabad who will be eligible to claim HRA exemption of up to 50% of the salary. Earlier, this exemption was capped at 40%. The Central Board of Direct Taxes notified the rules on March 20, 2026.

Hyderabad, Bengaluru, Pune and Ahmedabad are among the new urban agglomerations that join Mumbai, Delhi, Kolkata and Chennai for this higher tax break. Employees in other places in the country are allowed a 40% exemption.