There is relief news for employed people living in rented houses. The government is preparing to increase the scope of tax exemption on House Rent Allowance (HRA). According to the proposal, now like Delhi and Mumbai, the benefit of HRA exemption up to 50 percent will be available in Bengaluru, Hyderabad, Pune and Ahmedabad. At present this limit in these cities is 40 percent.

If this proposal is implemented, lakhs of employees will get direct benefits and their tax savings will increase.

What is the new proposal of the government?

As per current rules, employees residing in Mumbai, Delhi, Kolkata and Chennai get tax exemption on HRA up to 50 percent of the salary under the old tax regime. However, in other cities this limit is limited to 40 percent.

Now the government is preparing to add four more big cities to this list. According to the proposal-

Will also be included in metro category.

After this, employees living in a total of 8 cities will get 50 percent HRA exemption, while in other cities this limit will remain only 40 percent.

Why was this change necessary?

Cities like Bengaluru, Hyderabad and Pune have developed rapidly in the last few years. These cities are now the biggest cities of the country—

Have been made.

With the increase in employment, house rents have also increased significantly. In many areas, rents have become equal to or even higher than metro cities.

In such a situation, the limit of 40 percent was no longer sufficient for the employees. This step of the government is being considered as acceptance of the changed economic and social situation of these cities.

How much will be the impact on tax savings?

The biggest benefit of this decision will be given to those people who still choose the old tax regime.

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  Exemption available on HRA in the old tax regime

  
  


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  There is no HRA facility in the new tax regime.

  
  

If an employee falls in the 40% to 50% category, his taxable income will be reduced. From this-

• 
  

  will have to pay less tax

  
  


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  monthly savings will increase

  
  


• 
  

  More money will be left in your pocket

  
  

According to experts, this can benefit middle class employees to the extent of thousands of rupees annually.

When can the rule come into force?

At present this proposal is under consideration. It is expected that the government may implement it in the upcoming budget or financial amendment. The final situation will be clear only after the official announcement.

conclusion

This step of the government can prove to be a big relief for the employees struggling with rising inflation and rent pressure. If the proposal is implemented, apart from metros, people living in big cities will also get equal tax benefits.

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