Bhubaneswar, Feb. 18 -- The Central government has proposed to expand the list of cities that qualify for the higher House Rent Allowance (HRA) exemption under the old income-tax regime, a move that could result in meaningful increases in take-home pay for many government employees and other salaried workers.

Under the current tax rules, only four metropolitan centres- Mumbai, Delhi, Kolkata and Chennai- fall into the category where employees can claim HRA tax exemption up to 50% of their basic salary. Workers in all other cities are eligible for a lower HRA exemption of up to 40% of basic salary.

According to the Draft Income-Tax Rules, 2026, the government has proposed adding four major urban hubs to the list of cities eligible for th...