General view of Bengaluru.
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New Delhi: The Centre has said there is no plan to grant “metro city” status to Bengaluru.
Union Minister of State for Finance Pankaj Choudhary said, "There is no such proposal. It has been the stated policy of the government to rationalise the rates of taxation and move away from exemptions and deductions.”
Designating more cities as Metro cities and extending the benefit of a higher exemption limit on HRA (house rent allowances) to such cities would be contrary to the stated policy, the Minister said replying to Congress Rajya Sabha member from Karnataka Ajay Maken's question.
"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," he said.
While 50 percent of salary due is considered for computing limits for the purposes of exemption under section 10(13A) of the Act for the four cities, for other places, the limit is taken as 40 percent of the amount of salary due, the minister said.
At present, four cities '-- Delhi, Mumbai, Kolkata and Chennai-have the status of being 'metropolitan. With the 'metro' status, 50 per cent of the salary was considered for computing the exemption limits under section 10(13A). But for other cities, including Bengaluru, this limit has been set at 40 percent.
If included in metro cities, Bengaluru income taxpayers would be able to claim a 50 per cent exemption on salary equivalent to HRA, like other four metro cities. In 2022, December, Bengaluru South Lok Sabha member Tejasvi Surya in Parliament raised the issue and requested Union Finance Minister Nirmala Sitharaman to consider including Bengaluru in the list of 'metro cities' and so to benefit salaried employees who can claim full house rent exemption for income tax purposes.
The BJP leader also noted that Bengaluru – known as the 'IT capital' of the country - has a high population of salaried employees when compared to other cities.