No Metro Recognition for Bengaluru, Here Are the Reasons

Despite its rapid growth and status as a tech hub, Bengaluru has not been granted ‘Metro’ status for House Rent Allowance (HRA) tax exemptions. Union Minister Pankaj Chaudhary explained the policy’s basis and the government’s stance.

1. Income Tax Distinction: Under Rule 2A of the Income-tax Rules, 1962, only Mumbai, Kolkata, Delhi, and Chennai are considered metropolitan cities for HRA exemptions.
2. Exemption Limits: Residents of these metros get a 50% salary consideration for HRA exemptions, while Bengaluru and other cities get 40%.
3. Policy Explanation: The government aims to rationalize tax rates and reduce exemptions, making it inconsistent to grant more cities metro status for HRA benefits.
4. No Policy Change: Chaudhary confirmed no current plans to change the policy.
5. Historical Demand: There have been long-standing demands to recognize Bengaluru as a metro for HRA purposes.
6. Potential Benefits: Metro status could reduce taxable income for Bengaluru residents due to the high housing costs.
7. Economic Impact: Recognition as a metro city could have provided significant financial relief.
8. Industrial Perspective: Industrialists argue that it would make attracting and retaining skilled employees easier.
9. Living Costs: Higher HRA exemptions could help employees better manage Bengaluru’s high living expenses.
10. Future Considerations: As Bengaluru continues to grow, the push for metro status and reconsideration of tax policies may intensify.