The HRA you obtain out of your employer is not completely tax-exempt. The tax-exempt a part of the HRA is the lesser of the next:
a) The precise HRA out of your employer
b) 50% of the ‘wage’ if dwelling in metro cities (Delhi, Mumbai, Chennai, Kolkata), or 40% for different cities
c) The excess hire paid yearly over 10% of the annual ‘wage’
‘Wage’ consists of fundamental wage, dearness allowance (if it is a part of the retirement profit), and fee obtained as a proportion of turnover. Different allowances like particular allowance aren’t thought-about for computing the tax-exempted HRA quantity.
EY’s Interim Price range 2024 wishlist from a private taxation housing perspective reads:
- Embrace tier 2 cities (Hyderabad, Pune, Bengaluru, Ahmedabad, Gurgaon and many others.) within the record of metro cities for HRA exemption calculation functions (from 40% to 50% of fundamental wage)
- Take away the cap of Rs 2 lakhs in direction of the set-off of home property loss in opposition to different heads in the identical yr
- Improve the prevailing restrict for deduction of curiosity on housing mortgage for self-occupied property from Rs 2 lakhs to not less than Rs 3 lakhs
EY has additionally emphasised the necessity to overhaul the capital good points tax construction. EY lists the next asks almost about the capital good points tax:
- Standardise the holding interval and convey uniformity in tax charges throughout numerous asset lessons
- Improve the extant tax-free LTCG ceiling on sale of fairness shares/fairness oriented mutual funds/models of a enterprise belief from Rs 1 lakh to Rs 2 lakhs
- Just like immoveable property, present a tolerance restrict of not less than 10% of precise consideration for normative taxation functions for switch of unlisted shares
EY additionally says that FM Sitharaman ought to look to extend the tax-free threshold for presents from Rs 50,000 to Rs 100,000. Moreover, measures ought to be taken to expedite disposal of pending appeals.
“Present readability on taxation of employer’s contribution to specified funds in extra of Rs 7.5 lakhs and ‘accretions’ thereon – make clear features similar to identification of fund to which extra contributions are made, which means of ‘accretions’ in case of Superannuation Fund/NPS and computation methodology,” says EY.
FM Sitharaman is predicted to current the Interim Price range 2024 on February 1, 2024. A full yr Price range for the fiscal yr 2024-25 will solely be offered a while in June-July by the brand new authorities after the Lok Sabha polls 2024.
