Latest HRA Rules 2026: Important Update for Salaried Taxpayers

The Income Tax Department has introduced important changes to House Rent Allowance (HRA) compliance, effective from 1 April 2026. These changes aim to improve transparency and ensure accurate reporting of rent payments while claiming tax exemptions.

One of the key changes is the requirement to disclose the relationship with the landlord while claiming HRA exemption. This is especially relevant where rent is paid to parents or relatives. Such arrangements are still allowed, provided they are genuine and properly documented.

Employees claiming HRA exemption will also need to provide complete details such as the landlord’s name, PAN, address of the rented property, rent amount paid, and relationship with the landlord. This will help ensure accurate reporting and proper verification.

Additionally, more cities have been classified under the metro category, allowing eligible employees in those cities to claim higher HRA exemption. The exemption limit continues to be up to 50% of salary for metro cities and 40% for non-metro cities.

There is no change in the HRA calculation method. The exemption remains the lowest of the following: actual HRA received, rent paid minus 10% of salary, or 50% of salary (metro) or 40% of salary (non-metro). It is important to note that HRA exemption is available only under the old tax regime.

These changes are intended to improve compliance and transparency. Taxpayers should ensure proper documentation, accurate disclosure, and genuine rental arrangements to claim eligible tax benefits without complications.