Income Tax Draft Rules Propose Expanded Metro List for HRA and Monthly TDS Returns

The Income Tax Department has proposed draft rules for 2026 that expand the list of metro cities eligible for a 50% house rent allowance (HRA) exemption to include Bengaluru, Hyderabad, Pune, and Ahmedabad, beyond the current four metros. This change aims to reflect rising rents in growing urban centers and may influence taxpayers' choice between old and new tax regimes. Additionally, the department is considering shifting to monthly TDS returns and simplifying tax forms, based on over 13,000 public responses received during consultations.