Budget 2024: Will HRA Exemption Limit Increase in The Interim Budget? Check

As the eagerly awaited budget presentation approaches on February 1, Finance Minister Nirmala Sitharaman is expected to address the expectations of various sectors and taxpayers. Notably, speculations suggest potential modifications in the House Rent Allowance (HRA), bringing optimism for those working in different cities. This article explores the anticipated changes and their potential impact.

High Hopes for HRA Relief

The upcoming Union Budget has raised expectations for significant relief in House Rent Allowance (HRA), particularly for professionals residing in cities like Bangalore and Pune. The Finance Ministry is reportedly gearing up to introduce substantial amendments to the tax exemption available under HRA, potentially expanding its scope for those employed in non-metro cities.

Current HRA Regulations

Presently, the HRA rules vary for metro and non-metro cities. In metro cities, individuals can avail up to 50% tax exemption under HRA by combining Basic-DA, while other cities offer a 40% discount in HRA, including Basic-DA. The anticipated changes in the budget may focus on increasing the HRA exemption limit by 50% for individuals residing in non-metro cities.

Possible Increase in Exemptions

Budget 2024 might witness an enhancement in the HRA exemption limit for non-salaried individuals, potentially by 50%. Currently, non-salaried individuals enjoy tax exemption on House Rent Allowance under Section 80GG, with a monthly limit of Rs 5000 and a maximum yearly limit of Rs 60 thousand. The budget may consider raising this limit to provide additional relief.

Consideration for Non-Salaried Individuals

A noteworthy aspect is the potential increase in the limit of tax exemption on HRA for non-salaried individuals. Under Section 10(13A) of the Income Tax Act, taxpayers residing in rented houses can claim tax exemption from HRA. The total taxable income is calculated by deducting HRA from the overall income.

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