India, March 28 -- Extending the 50% HRA exemption to cities such as Hyderabad, Pune, Ahmedabad, and Bengaluru can significantly boost take-home pay for salaried individuals, especially those previously limited by the 40% cap. higher rental expenses. However, since HRA benefits are available only under the old tax regime, taxpayers should carefully compare their tax liability under both the old and new regimes before making a choice.

Take the case of Priya Banik, a mid-level professional in Hyderabad, who pays high rent and receives a House Rent Allowance that is close to half her basic salary. With the expanded 50% HRA ceiling, she can now fully utilise her eligible HRA under the old tax regime, reducing her taxable income significantly...