Quick Answer
Yes — Hyderabad is a metro city for HRA from FY 2026-27. The 50% of basic salary rate applies for HRA exemption under Section 10(13A).
Important transition: If you are filing the FY 2025-26 ITR (deadline 31 July 2026), the older 40% non-metro rate still applies because the change was notified in Budget 2025 effective FY 2026-27 onwards. The 50% rate only affects salary income earned from 1 April 2026.
What This Means for Your HRA Exemption
Worked example: a software engineer in Madhapur with ₹50,000 monthly basic salary, ₹25,000 HRA in their CTC, and ₹22,000 monthly rent.
| Condition | FY 2025-26 (40%) | FY 2026-27 (50%) |
|---|---|---|
| 1. Actual HRA received (annual) | ₹3,00,000 | ₹3,00,000 |
| 2. Rent paid − 10% of basic | ₹2,04,000 | ₹2,04,000 |
| 3. % of basic (Hyderabad-specific) | ₹2,40,000 (40%) | ₹3,00,000 (50%) |
| HRA exempt (least of 3) | ₹2,04,000 | ₹2,04,000 |
In this example the metro change does not increase the exemption because Condition 2 (rent − 10% of basic) is the binding constraint. The 50% metro rate only matters when rent is high enough that Condition 3 caps the exemption — typically when monthly rent is ≥35–40% of basic.
For a high-rent example: ₹50,000 basic, ₹25,000 HRA, ₹35,000 rent (premium 2BHK in Jubilee Hills or Banjara Hills):
- FY 2025-26 (40% non-metro): exemption capped at ₹2,40,000
- FY 2026-27 (50% metro): exemption rises to ₹3,00,000 — that is ₹60,000 more deduction, worth ₹18,720 in tax saved at the 30% slab plus cess
The 8 Metro Cities for HRA (FY 2026-27)
Budget 2025 expanded the metro list from 4 to 8 cities, all eligible for the 50% HRA exemption rate:
- Mumbai, Maharashtra
- Delhi (NCT)
- Kolkata, West Bengal
- Chennai, Tamil Nadu
- Bengaluru (Bangalore), Karnataka — added FY 2026-27
- Hyderabad, Telangana — added FY 2026-27
- Pune, Maharashtra — added FY 2026-27
- Ahmedabad, Gujarat — added FY 2026-27
All other cities — including Noida, Gurgaon, Jaipur, Thane, Lucknow, Surat, Visakhapatnam, Vijayawada, Warangal — continue at the 40% non-metro rate.
Hyderabad-Specific Notes
GHMC area = metro
The metro classification covers the entire Greater Hyderabad Municipal Corporation (GHMC) zone — Hyderabad city, Secunderabad cantonment, Cyberabad (HITEC City, Gachibowli, Madhapur, Kondapur, Nanakramguda), Kukatpally, Miyapur, LB Nagar, Kompally, Uppal. If your address falls within GHMC, the 50% rate applies from FY 2026-27.
Outside GHMC remains non-metro
Areas in Ranga Reddy district outside GHMC limits (Shamshabad outskirts, Maheshwaram, Ibrahimpatnam panchayat areas) continue to be classified as non-metro at 40%. Many IT employees commuting from these areas need to verify their address falls inside GHMC.
Why Hyderabad was added
Hyderabad's population crossed 1 crore around 2018 and the city's IT corridor (Cyberabad) houses major employers like Microsoft, Google, Amazon, Apple. Budget 2025 recognised the parity between Hyderabad and the original 4-metro list.
How to Claim HRA in Hyderabad
- Rent receipts — monthly receipts signed by the landlord, with stamp if rent exceeds ₹3,000/month.
- Rent agreement — registered if monthly rent is over ₹15,000 (Telangana Stamp Act applies).
- Landlord PAN — mandatory if annual rent exceeds ₹1,00,000 (₹8,333/month). If landlord has no PAN, file Form 60 with employer.
- Bank transfer proof — pay rent by NEFT/UPI, never cash. ITR scrutiny rejects cash-paid rent receipts almost automatically.
- Form 12BB — submit to employer at the start of each financial year and update if rent changes.
Frequently Asked Questions
Is Hyderabad metro or non-metro for HRA right now?
It depends on which financial year you are calculating for. For HRA on FY 2026-27 salary (April 2026 onwards), Hyderabad is metro at 50%. For FY 2025-26 ITR (filed July 2026), Hyderabad is still non-metro at 40%.
Should I update my HRA declaration to my employer in Hyderabad?
Yes — for FY 2026-27 declarations (made April–May 2026), recompute your projected HRA exemption with the 50% rate and update Form 12BB. Your employer will deduct lower TDS once they apply the higher exemption.
Does the metro change apply to old tax regime only or new regime too?
The metro reclassification applies to old tax regime only. The new tax regime does not allow HRA exemption at all. So this only matters if you have opted for the old regime for FY 2026-27.
Is HITEC City and Cyberabad covered under the Hyderabad metro classification?
Yes. HITEC City, Madhapur, Gachibowli, Kondapur, Nanakramguda, Manikonda, Kokapet are all within GHMC limits and qualify for the 50% metro rate from FY 2026-27.
Is Hyderabad a metro city as per income tax act?
From FY 2026-27, yes. Section 10(13A) of the Income Tax Act now treats Hyderabad as a metropolitan city alongside Delhi, Mumbai, Kolkata and Chennai. Earlier it was non-metro for HRA purposes.
Calculate Your Exact Hyderabad HRA Exemption
Enter your basic salary, HRA, and rent to see your annual HRA exemption with the new 50% metro rate.
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