Despite Bengaluru's rapid growth, the Centre has withheld metro city status for HRA tax exemptions, impacting residents' financial relief options.
Union Minister Pankaj Chaudhary noted that Rule 2A of the Income-tax Rules, 1962, designates only Mumbai, Kolkata, Delhi, and Chennai as metro cities, not Bengaluru.
For metro cities, 50% of the salary is eligible for HRA exemption under section 10(13A). For other cities like Bengaluru, the limit is 40%, affecting residents' taxable income.
Minister Chaudhary confirmed no policy changes, stating the government aims to rationalize tax rates and cut exemptions, which conflicts with granting metro status to more cities.
Residents and industrialists have long sought metro city status for Bengaluru to qualify for a 50% HRA tax exemption, akin to current metro cities, for significant tax savings.
Industrialists argue that metro city status for Bengaluru would benefit employees and employers by easing living costs with higher HRA exemptions and attracting skilled talent.
Reclassifying Bengaluru as a metro city would reflect its growth, align it with major metros, and foster a stable workforce by offering better HRA exemptions.
As Bengaluru grows, the push for metro city status may intensify. This debate reflects the tension between local expansion and national fiscal policies.