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List of Different 'Allowances' for Computation of 'Salary' Income

City compensatory allowance

Fully taxable under section 15.

House rent allowance

Exempt from tax to the extent of the least of the following:

  1. 50% of salary in Delhi, Bombay, Calcutta, Madras; or

  2. 40% of salary in other cases;

  3. House Rent Allowance; or

  4. the excess of rent paid over 10% of salary.

Entertainment allowance

This allowance is first included in salary and thereafter a deduction is allowed. In the case of Government employees, least of the following is exempt from tax:

  1. Rs. 5,000;
  2. 20% of salary; or
  3. Entertainment Allowance.

Children education allowance

It is exempt from tax to the extent it does not exceed Rs. 100 per month per child for a maximum of 2 children

(actual expenditure is not taken into consideration).

Hostel expenditure allowance

It is exempt from tax to the extent it does not exceed Rs. 300 per month per child for a maximum of 2 children

(actual expenditure is not taken into consideration).

Exemption is in addition to the exemption available in the case of children education allowance.

Transport allowance

It is given to an employee to meet his expenditure for the purpose of commuting between office and residence.

  • In the case of an employee who is blind or deaf and dumb or orthopedically handicapped, transport allowance is exempt up to Rs. 3,200 per month.

  • In the case of serving Chairman and members of UPSC, transport allowance is exempt from tax without any monetary ceiling.

  • In any other case, exemption is not available.

Allowance For Transport Employees

It is given to employees of transport undertaking to meet their personal expenditure during duty performed in the course of running of such transport from one place to another place.

The amount is exempt to the extent it does not exceed ...

  1. 70 % of the allowance or
  2. Rs. 10,000 per month,

    whichever is lower

(actual expenditure is not taken into consideration).

Tribal Area Allowance

Exempt up to Rs. 200 per month in some cases

Travelling Allowance, Conveyance Allowance, Helper Allowance, Research Allowance,
Uniform Allowance

These allowances are given to meet specific expenditure in performance of duties of an office.

  • Exemption is available to the extent the amount is utilized for the specific purpose for which the allowance is given.

Transfer Allowance

It is exempt from tax to the extent expenditure is incurred in connection with transfer, packing and transportation of personal effects on transfer from one place to another place.

Foreign Allowance

Exempt from tax if paid outside India by the Government to an Indian citizen for rendering service outside India.

Tiffin Allowance

Taxable.

Fixed Medical Allowance

Taxable.

Allowance received by a
Teacher/Researcher from a
SAARC Member State

Not taxable up to 2 years.

Sumptuary allowance to serving Chairman/members of UPSC

Not chargeable to tax.

Allowance to retired Chairman and retired members of UPSC

An allowance (subject to a maximum of Rs. 14,000 per month) for defraying the service of an orderly and for meeting expenses incurred towards secretarial assistance on contract basis, is not chargeable to tax.

 
Contents : Salary Income

 Important Links....for calculating Salary Income

(A). Salary -Definition & Meaning
(B). Provident Fund
(C). Allowance
(D). Perquisites
(E). Profit in lieu of Salaly
(F). Retirement Benefits
(G). Deductions
(H). Table Presentation of Salary Income (Section 15 to 17)
 
 
 
 
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