Clipped from: https://www.financialexpress.com/money/tax-talk-rent-paid-landlords-pan-will-come-prefilled-in-itr-4179249/
Starting April 2026, India’s salaried class will transition to the New Income-tax Rules 2026. Key updates include the reclassification of Bengaluru, Hyderabad, Pune, and Ahmedabad as metro cities for 50% HRA benefits, streamlined tax forms reduced from 399 to 190, and a new mandatory disclosure for related-party rental arrangements in Form 124.
Salary Slips 2.0: How the Income-Tax Rules 2026 Will Change Your HRA and Take-Home Pay
From April 2026, salary slips and tax filings are set for a refresh. The Income-tax Rules, 2026 applies across HRA, perquisites and tax-filing formats, aligning long-standing limits and processes with current conditions.
HRA-related information
A clearer picture of these changes will emerge as the year progresses. For HRA, employees in the newly classified metros will see their rent-related information, such as the landlord’s PAN, forming the basis of prefilled values when they file their returns. Perquisites, too, whether routine allowances or car-related items, will show updated calculations from the beginning of the financial year and with greater consistency as payroll systems adopt the updated tables.
Rather than introducing new layers of compliance, the rules focus on presenting familiar elements of the salary structure in a more standardised format that digital systems can interpret and reconcile with ease.
The most relatable change for many salaried individuals is HRA. The rules will treat BengaluruBengaluru, Hyderabad, Pune and Ahmedabad as “metro” cities for HRA purposes, grouping them with Delhi, Mumbai, Kolkata and Chennai. Employees living in any of these eight cities may compute HRA exemption using the higher 50% of salary cap once the rules are notified and effective from FY 2026-27. The move simply brings HRA treatment in large urban centres onto a common footing.
Condensed forms
There is also a quieter but important shift in forms themselves. The CBDT has placed a condensed set of forms in the public domain, reducing the total number of forms from 399 to 190 and number of rules from 511 to 333. Formats are redesigned to standardise common fields, support prefill, reconciliation, and reduce repetitive entry.\
For employees, that means familiar payroll data should flow more cleanly into the annual return. For employers, TDS and employee-facing certificates sit within a more uniform, technology-friendly set of forms.
As part of the redesigned salary-related forms, the employee declaration Form No. 124, that replaces Form 12BB, includes a new field seeking disclosure of the relationship with the landlord where HRA is claimed.
This addition sits alongside the broader push for prefill and reconciliation: the aim is to improve data consistency between what employees declare and what landlords report, and to bring greater transparency to related-party rental arrangements rather than alter the underlying HRA formula. It also means employees should be mindful that HRA claims are expected to reflect genuine rental arrangements, as the system increasingly relies on structured disclosures and cross-verification.
Stepping back, the rules signal a progressive shift toward simpler language, standardised reporting and technology-led compliance.
(The writer is tax partner, EY India. Inputs from Shanmuga Prasad, director, EY India)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.
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