With the monsoon session of Parliament approaching, all eyes are on Finance Minister Nirmala Sitharaman as she presents Modi 3.0 government's first Union Budget. As expectations of potential populist measures and tax relief initiatives rise, employed taxpayers are hoping for changes in the exemption for House Rent Allowance (HRA) under the old tax regime. Experts suggest that revisiting the classification of HRA exemptions, which has remained unchanged for over three decades, could provide significant financial relief for taxpayers residing in rapidly growing non-metro cities. Additionally, the government may introduce incentives to encourage transition from the old tax system to the new one, ultimately boosting middle-class consumption and GDP figures.
Budget 2024: Expectations Around HRA Exemption Changes
The upcoming Union Budget in the monsoon session of Parliament has sparked anticipation among salaried taxpayers, particularly regarding potential revisions to the exemption for House Rent Allowance (HRA). The HRA exemption under the old tax regime has remained unchanged for over three decades, and experts believe its revisiting could provide much-needed relief to taxpayers in non-metro cities.
Background:
The HRA exemption is a deduction from gross salary allowed to employees who pay rent for their accommodation. Under the current system, the exemption is calculated as follows:
** Expectations:**
Government's Perspective:
The government may consider revising the HRA exemption as part of its efforts to provide relief to the middle class and stimulate economic growth. However, it is also important to balance this with the need for revenue generation.
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