A key suggestion is related to aligning HRA provisions with residential area classifications to address metro and non-metro disparities besides introducing a dedicated remark column in forms to let taxpayers furnish additional information.
Currently, calculations for HRA exemptions vary based on whether an employee resides in a metro city-defined as Delhi, Mumbai, Kolkata, or Chennai-or elsewhere. Tax professionals argue that rapid urbanisation and rising rents in several non-metro cities warrant a reclassification or a more nuanced approach to ensure equitable tax treatment. The income tax department is planning to make all the forms and draft rules notified by March-end to give enough preparation time to taxpayers and businesses.
“The consultation process has attracted 13,600 responses so far, with the window for public comments closing on February 22,” a senior official told ET.
Out of the total suggestions, about 450 suggestions are relevant and have been picked up by the department for further deliberation. These are from professionals, industry chambers, and tax experts. The suggestions asked for further simplification of tax forms and renaming tax returns based on its utility.
The outreach exercise was part of the government’s broader effort to smoothen the transition to the new tax regime, which will come into effect at the start of next fiscal year.