SPECIAL ALLOWANCES

Special Allowances: [Section 10(14)]

(A)   Allowances exemption of which depends upon actual expenditure:

In case of following allowances, lower of the following is exempt…….

A. Allowance Received

OR

B. Actual expenditure incurred for the specific purpose.

  1. Travelling Allowance/Transfer Allowance
  2. Conveyance Allowance
  3. Daily Allowance
  4. Helper Allowance
  5. Research allowance
  6. Uniform Allowance

(B)   Allowances exemption of which does not depend upon actual expenditure:

In case of following allowances, lower of the following is exempt….

A. Allowance Received

OR

B. Limit Specified in Rule 2BB

  1. Children Education Allowance: Exempt up to Rs.100 per month per child for maximum two children.
  2. Children Hostel Allowance: Exempt up to Rs.300 per month per child for maximum two children.
  3. Transport Allowance: (for commuting between place of residence and place of duty) Exempt up to Rs.1, 600 per month (Rs.3, 200 per month in case of employees who is blind or deaf or dumb or orthopedically handicapped).

➢ Allowances which are fully taxable:

  1. Dearness Allowance
  2. City Compensatory Allowance
  3. Medical Allowance
  4. Lunch/ Tiffin Allowance
  5. Servant Allowance
  6. Overtime Allowance

➢ Allowances which are fully exempt in case of certain persons:

  1. Allowances to a citizen of India, who is Government employee, for rendering services outside India.
  2. Allowances to High Court and Supreme Court Judges.

➢Entertainment Allowance: Entertainment Allowance received by any employee is first included in the Gross Salary income, as if it is fully taxable. Then after deduction from Gross Salary under section 16 (ii) is available only to the Government employees (Central Government and State Government). Lower of the following is deductible from Gross Salary undersection16 (ii)……

  1. 20% of Basic Salary
  2. 5, 000
  3. Actual Entertainment Allowance received
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s