Update on the potential increase in the HRA tax exemption for employees: The Finance Minister may raise the cap

Update on the potential increase in the HRA tax exemption for employees: The Finance Minister may raise the cap

Update on the potential increase in the HRA tax exemption for employees: The Finance Minister may raise the cap

Budget 2024 Expectation: Significant assistance for workers in several cities is anticipated, if Finance Ministry sources are to be trusted. There might be good news, particularly for residents of Bangalore and Pune.

It's almost time for the budget to arrive. On February 1st, Finance Minister Nirmala Sitharaman will deliver the budget. The Union Budget is expected to meet the high expectations of many industries and taxpayers. However, it won't be known until the budget is presented how well these expectations will be met. Good news for those in employment is on the horizon, based on previously obtained information from sources. There might be adjustments to the budget for the house rent allowance (HRA).

What does this mean for those who are employed?

There are plans in place to provide significant assistance to those employed in several cities, if sources inside the Finance Ministry are to be trusted. There might be good news, particularly for residents of Bangalore and Pune. The Finance Minister may alter the tax exemption granted by HRA in Budget 2024. Currently, there is room to expand the tax exemption program for those employed in non-metropolitan areas. Announcement is also available to citizens of other cities than metro areas.

Getting ready to expand the HRA's tax exemption

The existing system establishes guidelines for dwelling rent allowance in both metro and non-metropolitan areas. By merging Basic-DA, HRA offers a 50% tax exemption in four metro areas. At the same time, there is a 40% HRA reduction, including Basic-DA, available in other cities. The HRA exemption limit for residents in non-metropolitan areas may now be raised by 50% under the budget. In addition, the HRA exemption of Rs 60,000 that is offered to non-salaried persons annually may be raised.

Unpaid individuals may get gifts

For those who do not get a salary, the maximum amount of tax exemption on HRA is Rs 60 thousand. The budget may be expanded to cover this. Currently, non-salaried people are excused from paying taxes on house rent allowance, or HRA, under section 80GG. The maximum in a fiscal year is Rs 60,000, with a monthly cap of Rs 5,000. It is possible to think about raising this cap.

How may I get an HRA income tax deduction?

The taxpayer must rent a home in order to be eligible to claim income tax on HRA. Section 10(13A) of the Income Tax Act allows for the claim of a tax exemption from house rent allowance, or HRA. HRA is subtracted from the overall income to get the total taxable income.