The answer comes amid demands for Bengaluru to be categorised as a metro city, which will entail many financial benefits to the city.
Published Aug 08, 2024 | 4:30 PM ⚊ Updated Aug 08, 2024 | 5:42 PM
(Wikimedia/ Raghavan2010)
Despite being known as the Silicon Valley of India, and being a major IT hub, Bengaluru is yet to be recognised as a “metro” city by the Income Tax department.
Minister of State for Finance Pankaj Chaudhary on Monday, 6 August, in response to a question raised by the Karnataka Rajya Sabha member Ajay Makan if Bengaluru will be considered for HRA exemption in income tax as a metro city, clarified that no more cities will be categorised as “metro cities”.
The answer comes amid demands for Bengaluru to be categorised as a metro city, which will entail many financial benefits to the city along with the HRA exemption.
The “metro” tag is not only important for the brand of a city but also is essential for the HRA exemption. The salaried employees of a metro city are eligible for 50 percent of the (basic salary and Dearness Allowance) exemption, and the employees of a non-metro city are eligible for 40 percent of the (basic salary and Dearness Allowance) exemption.
Only four cities in India are termed as “metro” cities— Chennai, Mumbai, Delhi and Kolkata.
Rajya Sabha member Ajay Makan asked the finance ministry if 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.”
He also followed up with the question if, the “Government proposes to rightfully add Bengaluru to the already existing four designated metropolitan cities so that the residents can claim 50 percent of their salary exemption from income tax equivalent to HRA?”
Answering the first question of Makan, Chaudhary noted that, “As per Rule 2A of the Income-tax Rules, 1962, a distinction has been drawn between the cities of Bombay (Mumbai), Calcutta (Kolkata), Delhi and Madras (Chennai) on the one hand and other places on the other hand with respect to the amount which is to be excluded from the total income of an assessee 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.”
“While a sum of 50 percent of salary due is considered for computing limits for the purposes of exemption under section 10(13A) of the Act in respect of the four cities as mentioned above, for other places, the said limit is taken as 40 percent of the amount of salary due.”
The MoS reasoned that “It has been the stated policy of the Government to rationalize the rates of taxation and move away from exemptions and deductions. Hence, designating more cities as metro cities and extending the benefit of a higher exemption limit on HRA to such cities is contrary to the stated policy. ”
Speaking to South First, Raghavendra Rao, tech brand consultant expressed disappointment in not getting the metro tag, “Bengaluru has been deprived of metro city status for a very long time. We level up to every benchmark of a metro city yet do not get the tag.”
He further opined, “We are at par with the metro cities in every aspect, including rail, and air connectivity. There is also no political will or formation which can ensure this. The nation has grown so much because of Bengaluru but we have not been paid back with the same coin. It is high time Bengaluru gets the metro status.”
Karnataka Congress MLA Rizwan Arshad speaking with South First, claimed that the central government works on elimination. “They are eliminating Bengaluru for the simple reason that Bengaluru is politically not with them.”
“Despite being ahead of any other major cities, in terms of exports, and in terms of contributing to the economy of the country, they are not categorising the city as metro just to save certain taxes (HRA).”
Claiming that the Modi government had always had an anti-South attitude, the Congress MLA stated, “They don’t want to add another city from south India to the metro list, this will hit the working middle class.”
(Edited by Sumavarsha Kandula)
