—Guide
Salary Structuring for Hyderabad Employers: HRA, Metro Status and IT Sector Practices
Salary structuring points specific to Hyderabad — HRA exemption and metro-city status, accommodation perquisite values, IT sector practices, Telangana Professional Tax and the Labour Codes.
Hyderabad employers, especially in IT services, global capability centres and pharma, compete for talent with carefully designed salary packages. A few points are specific to the city.
HRA and Metro Status
Under the old regime, the HRA exemption uses 50% of salary for employees living in metro cities and 40% elsewhere. Under the Income-tax Act, 1961, only Delhi, Mumbai, Kolkata and Chennai counted as metros, so Hyderabad employees used 40%. Draft rules under the Income-tax Act, 2025 proposed extending the 50% rate to more cities, including Hyderabad. Check the final rules for the relevant year. The HRA exemption is available only under the old regime.
Accommodation Perquisite
Hyderabad falls in the highest population category for valuing employer-provided accommodation, which affects senior and expatriate employees given housing.
IT Sector Practices
- Flexible benefit plans letting employees choose components.
- Employer NPS contributions, attractive under the new regime.
- ESOPs and RSUs, including RSUs from foreign parent companies.
- Relocation, joining and retention bonuses, taxed as salary.
Foreign Parent RSUs
Employees of Indian subsidiaries receiving RSUs from a foreign parent are taxed on vesting or allotment as a perquisite, and must report foreign shares in their tax returns. Employers should include the value in TDS.
Telangana Professional Tax
Deduct Telangana PT from salaries at the state's slabs, and apply the correct state's PT for employees working elsewhere.
Labour Codes
Allowance-heavy structures common in IT should be checked against the 50% wage rule, since it affects PF and gratuity.
Getting Help
Think Filing designs salary structures for Hyderabad employers and handles perquisite valuation and payroll TDS.