No Proposal to consider Bengaluru Metro-city for HRA Exemption in Income Tax

The Minister of State in the Ministry of Finance Shri. Pankaj Chaudhary has stated in response to a question raised in Lok Sabha that No Proposal to consider Bengaluru Metro-city for HRA Exemption in Income Tax.

The Minister Shri Ajay Makan asked the question in Lok Sabha:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government is aware that Bengaluru is not considered a Metropolitan City for the House Rent Allowance (HRA) related tax exemptions under income tax laws; and

(b) whether Government proposes to rightfully add Bengaluru to the already existing four designated Metropolitan Cities so that the residents can claim 50% of their salary exemption from income tax equivalent to HRA?

The Minister of State in the Ministry of Finance Shri. Pankaj Chaudhary replied:

(a) According to Rule 2A of the Income-tax Rules, 1962, a distinction has been made between the cities of Bombay, Calcutta, Delhi, and Madras on the one hand, and other places on the other, in terms of the amount that is to be excluded from an assessee’s total income in respect of the special allowance granted to an employee for residential accommodation as referred to in section 10(13A) of the Income-tax Act, 1961. In the four cities indicated above, a total of 50% of salary due is considered for determining limitations for the purposes of exemption under section 10(13A) of the Act; in other areas, the aforementioned limit is 40% of the amount of salary due.

(b) There is no such proposal. The government’s stated policy is to rationalize tax rates and eliminate exemptions and deductions. As a result, classifying more cities as metro cities and extending the benefit of a higher HRA exemption limit to them goes against the stated policy.