Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Short answer: For FY 2025-26 (the return you are filing now in AY 2026-27), Bengaluru is not a metro city for HRA — only Delhi, Mumbai, Kolkata, and Chennai count, so the Rule 2A salary cap is 40% of salary. For FY 2026-27 payroll and HRA declarations (effective 1 April 2026), Bengaluru is a metro city under the expanded seven-city list, so the cap rises to 50%. Same city, same employee — two different answers depending on which financial year you are computing. Use our HRA exemption calculator and pick the FY explicitly; do not assume one list applies everywhere.
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Why this question trips up even experienced filers
If you search “is Bengaluru metro for HRA,” most pages give a single yes-or-no answer. That is wrong for anyone filing in the current season.
The law did not flip Bengaluru overnight from non-metro to metro for all purposes. The expanded metro list — adding Bengaluru, Hyderabad, and Pune alongside the original four — applies from 1 April 2026, i.e. FY 2026-27 onward. Your ITR for FY 2025-26 still uses the four-city list. Payroll teams setting HRA for the year starting April 2026 use the seven-city list.
Tools and articles that ignore the financial year, or that apply the 2026 expansion to the 2025-26 filing season, will misstate your exemption by thousands of rupees. The transition is FY-specific, not “as of today’s date” in a generic sense.
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The statutory pins: Section 10(13A) and Rule 2A
HRA exemption under the old tax regime flows from Section 10(13A) of the Income-tax Act, 1961, read with Rule 2A of the Income-tax Rules.
Section 10(13A) exempts HRA to the extent prescribed — it does not itself list metro cities.
Rule 2A sets the three-part test. Exemption is the least of:
- Actual HRA received from the employer
- Rent paid minus 10% of salary (salary = basic + DA if forming part of retirement benefits)
- 40% or 50% of salary — 50% if the rented property is in a metro city, 40% otherwise
The metro/non-metro split is entirely in component (3). Bengaluru renters are affected only when that third limb is the binding limit — not when actual HRA or rent-minus-10% is lower.
HRA exemption is not available in the new tax regime (Section 115BAC). This article assumes the old regime, where HRA under 10(13A) remains relevant.
The amending notification number for the expanded metro list will be added when cited in official commentary; it is pending insertion in our source record and is not invented here.
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Metro lists by financial year (from verified config)
Effective date of expansion: 1 April 2026 (metroChangeEffective).
CA-confirmed transition (Harun Raaj, 04-08-2026): ITR filings for FY 2025-26 use the four-city list. Current-year payroll and HRA declarations for FY 2026-27 use the expanded list. Tools must select the list by the FY being computed and surface this transition — not a single static metro table.
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Worked example: Bengaluru renter — FY 2025-26 vs FY 2026-27
Assume an employee on the old regime, renting in Bengaluru, with:
Step 1 — Rent minus 10% of salary
10% of ₹10,00,000 = ₹1,00,000
₹6,00,000 − ₹1,00,000 = ₹5,00,000
Step 2 — FY 2025-26 (Bengaluru = non-metro, 40%)
40% of salary = ₹4,00,000
Exemption = minimum of (₹4,50,000 HRA, ₹5,00,000 rent−10%, ₹4,00,000 cap) = ₹4,00,000
The 40% non-metro cap binds.
Step 3 — FY 2026-27 (Bengaluru = metro, 50%)
50% of salary = ₹5,00,000
Exemption = minimum of (₹4,50,000, ₹5,00,000, ₹5,00,000) = ₹4,50,000
Actual HRA binds; the 50% metro cap no longer cuts exemption below HRA.
Annual HRA exemption difference: ₹50,000 (₹4,50,000 − ₹4,00,000).
Illustrative tax impact on that ₹50,000 (old regime, 30% slab + 4% cess on tax):
₹50,000 × 30% × 1.04 ≈ ₹15,600 less tax in the FY 2026-27 metro treatment vs FY 2025-26 non-metro treatment — for this salary and rent profile.
If rent is lower or HRA is smaller, rent-minus-10% or actual HRA may bind in both years, shrinking or eliminating the gap. Run your numbers in the HRA exemption calculator with the correct FY selected.
Keep rent receipts and landlord details consistent with declared rent; use the rent receipt generator if you need formatted records (PAN required when annual rent to one landlord exceeds ₹1,00,000 — CBDT Circular 8/2013).
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Why most websites get the Bengaluru metro answer wrong
- Single static metro list — Publishing “Bengaluru is metro” without FY context ignores that FY 2025-26 filers must use 40%.
- Confusing “current year” with “filing season” — August 2026 sits in AY 2026-27 filing for FY 2025-26 income; metro expansion applies to FY 2026-27 income from April 2026.
- Copying payroll blogs into ITR guidance — Employers updating metro lists for April 2026 payroll are correct for FY 2026-27; that does not retroactively change FY 2025-26 returns.
- Ignoring Rule 2A mechanics — Metro status only matters when the 40%/50% limb is decisive; many renters see no difference if rent-minus-10% is lowest.
- New vs old regime — Pages discussing Bengaluru “metro benefits” without stating old regime only mislead new-regime taxpayers who get no HRA exemption.
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Practical checklist
Filing ITR for FY 2025-26 (now):
- Bengaluru → non-metro → 40% cap
- Metro cities: Delhi, Mumbai, Kolkata, Chennai only
Payroll / HRA declaration for FY 2026-27 (from 1 Apr 2026):
- Bengaluru → metro → 50% cap
- Metro cities: seven (original four + Bengaluru, Hyderabad, Pune)
Always: Old regime only; verify which Rule 2A limb binds; align metro list with FY, not a generic “2026 update” headline.
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FAQ
1. Is Bengaluru a metro city for HRA when I file my FY 2025-26 return?
No. For FY 2025-26, Bengaluru is non-metro. Use the 40% of salary limit under Rule 2A. Only Delhi, Mumbai, Kolkata, and Chennai are metros for that year.
2. When does Bengaluru become metro for HRA?
From 1 April 2026 (FY 2026-27). Payroll and HRA computations for that year use the 50% metro cap for Bengaluru.
3. I work in Bengaluru but my employer still uses 40% for FY 2026-27 payroll — what should I do?
For FY 2026-27, Rule 2A supports 50% for Bengaluru. Discuss with payroll/HR so declarations and TDS align. Your FY 2025-26 ITR still uses 40% regardless of what payroll adopts later.
4. Is Pune a metro city for HRA — same as Bengaluru?
Same two-part answer. FY 2025-26: Pune is non-metro (40%). FY 2026-27 from 1 Apr 2026: Pune is metro (50%), on the expanded seven-city list with Bengaluru and Hyderabad.
5. Is Hyderabad a metro city for HRA?
Yes for FY 2026-27 onward (50% cap from 1 Apr 2026). No for FY 2025-26 filing — Hyderabad is non-metro (40%), like Bengaluru and Pune, for the return you file in the current season.
6. Does new tax regime change Bengaluru’s metro status?
No. Metro vs non-metro only affects HRA under Section 10(13A) / Rule 2A in the old regime. The new regime does not allow HRA exemption (hraExemptionAvailable: false). Metro lists are irrelevant if you are on the new regime.
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Verify your exemption
- HRA exemption calculator — select FY 2025-26 or FY 2026-27 explicitly
- Rent receipt generator — documentation for declared rent
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Auto-synced, last built 2026-08-04. Last verified: 2026-08-04.
Reviewed by CA Harun Raaj, ICAI Membership No. 238303.
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