Ahmedabad joins metro league, HRA tax relief rises to 50%

Ahmedabad: Ahmedabad will join the list of cities eligible for a higher House Rent Allowance (HRA) exemption from the new financial year, offering salaried employees a larger tax break under the old tax regime from April 1.Under the revised income tax rules, employees residing in Ahmedabad can now claim HRA exemption of up to 50% of their salary for calculation purposes, compared with 40% earlier when the city was classified as a non-metro. With this revision, Ahmedabad has been placed alongside metros such as Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune for HRA purposes.The change is expected to benefit segment of the city's salaried workforce, particularly those employed in sectors such as technology, finance, pharmaceuticals, manufacturing and services, and availing exemptions under the old regime. Tax experts said the move could significantly improve tax efficiency for individuals who continue under the old tax regime and receive HRA as part of their salary package. However, the exemption remains conditional on actual rent payments and proper documentation."The higher HRA exemption is a major relief for Ahmedabad-based employees as rental costs in many areas have risen sharply," said Jainik Vakil, chairman of the direct tax committee of the Gujarat Chamber of Commerce and Industry (GCCI).Chartered accountant Karim Lakhani noted that while the revised rule increases the upper limit, the final exemption will still depend on salary structure and rent paid, with higher-income employees likely to benefit the most.