Bengaluru is yet to receive the ‘metro’ tag and is unlikely to get it anytime soon. But how much of a difference will it make to residents should the city be upgraded to a metropolis?
“I would say it makes a huge difference to a large section of people who are salaried and pay income tax. Having a greater house rent allowance (HRA) exemption (50% for metros, and 40% for cities like Bengaluru) allows them to deal with rental costs which are no less in any of the so-called metro cities,” says Srinivas Alavilli, civic activist.
An urban planner shares that places are classified as villages, towns, cities and metros based on census data and population. “But these definitions are not followed in India. The classifications are fixed. It is not an adaptable formula and the status is not updated regularly,” she says. In India, the classification is made on the basis of income tax rules which were drafted in the 1960s. “Now, the IT rules are difficult to redefine,” she adds.
Alavilli explains that as Mumbai, Chennai, New Delhi and Kolkata were classified as metros decades ago, keeping Bengaluru out no longer makes sense. “In terms of population and growth, if Bengaluru is not a metro, I do not know what is. It is the engine of economic growth and highest direct taxpayer city of India,” he states.
Apart from tax exemptions, Bengaluru and other metro cities deserve to have empowered metropolitan governance systems to better serve citizens, Alavilli believes.
“HRA is where it matters the most,” says N Rohit Simha, who is a director at an MNC. Though he does not claim HRA, he points out its benefits. The government is rationalising tax and does not want to add more exemptions, he says.
“I do not think this is fair. Bengaluru’s software workforce generates a lot of revenue for the government and they should give back to these individuals in some way,” he notes.
Status quo
Last week, union minister of state for finance, Pankaj Chaudhary, stated that the current rational tax policy (which offers higher HRA tax exemptions for metros) would not be changed. This means that Bengaluru does not technically qualify as a metro.