S. N.
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Section
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Particulars
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A.
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Allowances
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1.
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Least of the following is exempt:
a) Actual HRA Received
b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)
c) Rent paid minus 10% of salary
* Salary= Basic + DA (if part of retirement benefit) + Turnover
based Commission
Note:
i. Fully Taxable, if HRA is received by an
an employee who is living in his own house or if he does not pay any rent
ii. It is mandatory for the employee to report PAN of the
landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No.
08 /2013 dated 10th October 2013].
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2.
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Children Education Allowance
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Up to Rs. 100 per month per child up to a maximum of 2 children
is exempt
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3.
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Hostel Expenditure Allowance
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Up to Rs. 300 per month per child up to a maximum of 2 children
is exempt
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4.
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Transport Allowance granted to an employee to meet the expenditure
for the purpose of commuting between place of residence and place of duty
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Rs. 3,200 per month granted to an employee, who is blind or deaf
and dumb or orthopedically handicapped with disability of lower extremities
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5.
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Transport Allowance to an employee working in any transport
business to meet his personal expenditure during his duty performed in the
the course of running of such transport from one place to another place provided
the employee is not in receipt of the daily allowance.
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Amount of exemption shall be lower of the following:
a) 70% of such allowance; or
b) Rs. 10,000 per month.
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6.
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Conveyance Allowance granted to meet the expenditure on
conveyance in performance of duties of an office
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Exempt to the extent of expenditure incurred
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7.
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Any Allowance granted to meet the cost of travel on tour or on
transfer
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Exempt to the extent of expenditure incurred
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8.
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Daily Allowance to meet the ordinary daily charges incurred by an
an employee on account of absence from his normal place of duty
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Exempt to the extent of expenditure incurred
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9.
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Helper/Assistant Allowance
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Exempt to the extent of expenditure incurred
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10.
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Research Allowance granted for encouraging the academic research
and other professional pursuits
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Exempt to the extent of expenditure incurred
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11.
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Uniform Allowance
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Exempt to the extent of expenditure incurred
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12.
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Foreign allowances or perquisites paid or allowed by Government
to its employees (an Indian citizen) posted outside India
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Fully Exempt
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13.
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-
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Allowances to Judges of High Court/Supreme Court (Subject to
certain conditions)
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Fully Exempt.
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14.
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Following allowances and perquisites are given to serving
Chairman/Member of UPSC is exempt from tax:
a) Value of rent-free official residence
b) Value of conveyance facilities including transport allowance
c) Sumptuary allowance
d) Leave travel concession
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Fully Exempt
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15.
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-
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Allowances paid by the UNO to its employees
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Fully Exempt
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16.
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Allowances to Retired Chairman/Members of UPSC (Subject to
certain conditions)
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Exempt subject to a maximum of Rs.14,000 per month for defraying
services of an orderly and for a secretarial assistant on a contract basis.
The value of residential telephone free of cost and the number of
free calls to the extent of 1500 per month shall be exempt.
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17.
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Special compensatory Allowance (Hilly Areas) (Subject to certain
conditions and locations)
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Amount exempt from tax varies from Rs. 300 per month to Rs. 7,000
per month.
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18.
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Border area allowances, Remote Locality allowance or Disturbed
Area allowance or Difficult Area Allowance (Subject to certain conditions and
locations)
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Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300
per month.
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19.
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Tribal area allowance is given in (a) Madhya Pradesh (b) Tamil Nadu
(c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa
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Rs. 200 per month
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20.
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Compensatory Field Area Allowance. If this exemption is taken,
an employee cannot claim any exemption in respect of border area allowance
(Subject to certain conditions and locations)
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Rs. 2,600 per month
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21.
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Compensatory Modified Area Allowance. If this exemption is taken,
an employee cannot claim any exemption in respect of border area allowance
(Subject to certain conditions and locations)
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Rs. 1,000 per month
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22.
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Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is
taken, the employee cannot claim any exemption in respect of border area
allowance (Subject to certain conditions and locations)
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Rs. 3,900 per month
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23.
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Underground Allowance is granted to employees working in
uncongenial, unnatural climate in underground mines
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Up to Rs. 800 per month
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24.
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High Altitude Allowance is granted to armed forces operating in
high altitude areas (Subject to certain conditions and locations)
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a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000
feet)
b) Up to Rs. 1,600 per month (for altitude above 15,000 feet)
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25.
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Highly active field area allowance granted to members of armed
forces (Subject to certain conditions and locations)
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Up to Rs. 4,200 per month
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26.
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Island Duty Allowance granted to members of armed forces in Andaman
and Nicobar and Lakshadweep group of Island
(Subject to certain conditions and locations)
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Up to Rs. 3,250 per month
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B.
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Perquisites
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1.
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read with
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Rent-free unfurnished accommodation provided to Central and State
Government employees
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License Fees determined in accordance with rules framed by
Government for allotment of houses shall be deemed to be the taxable value of
perquisites.
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C.
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Deduction from
salary
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1.
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Standard Deduction
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Rs. 50,000 or the amount of salary, whichever is lower
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2.
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Entertainment Allowance received by the Government employees
(Fully-taxable in case of other employees)
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Least of the following is deductible :
a) Rs 5,000
b) 1/5th of salary (excluding any allowance, benefits or other perquisites)
c) Actual entertainment allowance received
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3.
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Employment Tax/Professional Tax.
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Amount actually paid during the year is deductible.
However, if professional tax is paid by the employer on behalf of its
employee than it is first included in the salary of the employee as a
perquisite and then the same amount is allowed as deduction.
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D.
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Retirement
Benefits
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a) Leave Encashment
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1.
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c) Gratuity
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1.
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Gratuity received by Government Employees (Other than employees
of statutory corporations)
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Fully Exempt
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2.
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Death -cum-Retirement Gratuity received by other employees who
are covered under the Gratuity Act, 1972 (other than Government employee)
(Subject to certain conditions).
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Least of the following amount is exempt from tax:
1. (*15/26) X Last drawn salary** X completed year of
service or part thereof in excess of 6 months.
2. Rs. 20,00,000
3. Gratuity actually received.
*7 days in case of an employee of the seasonal establishment.
** Salary = Last drawn salary including DA but excluding any
bonus, commission, HRA, overtime and any other allowance, benefits or
perquisite
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3.
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Death -cum-Retirement Gratuity received by other employees who
are not covered under the Gratuity Act, 1972 (other than Government employee)
(Subject to certain conditions).
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Least of the following amount is exempt from tax:
1. Half month’s Average Salary* X Completed years of service
2. Rs. 20,00,000
3. Gratuity actually received.
*Average salary = Average Salary of last 10 months immediately
preceding the month of retirement
** Salary = Basic Pay + Dearness Allowance (to the extent it
forms part of retirement benefits)+ turnover based commission
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d) Pension
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1.
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Pension received from United Nation Organization by the employee
of his family members
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Fully Exempt
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2.
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Commuted Pension received by an employee Central Government,
State Government, Local Authority Employees and Statutory Corporation
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Fully Exempt
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3.
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Commuted Pension received by other employees who also receive
gratuity
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1/3 of the full value of a commuted pension will be exempt from tax
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4.
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Commuted Pension received by other employees who do not receive
any gratuity
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1/2 of the full value of a commuted pension will be exempt from tax
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5.
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Family Pension received by the family members of Armed Forces
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Fully Exempt
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6.
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Family pension received by family members in any other case
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33.33% of Family Pension subject to a maximum of Rs. 15,000 shall
be exempt from tax
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f) Provident
Fund
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1.
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Employee’s Provident Fund
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For taxability of contribution made to various employee’s
provident fund and interest arising thereon see Note 3.
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National Pension System (NPS)
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1.
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National Pension System
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Any payment from the National Pension System Trust to an assessee
on the closure of his account or on his opting out of the pension scheme referred
to in section
80CCD, to the extent it does not exceed 60% of the total amount payable
to him at the time of such closure or his opting out of the scheme.
Note: Partial withdrawal from the NPS shall be exempt to the
the extent of 25% of the amount of contributions made by the employee.
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E.
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2.
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If an individual receives any portion of his salary in arrears or
in advance or receives profits in lieu of salary, he can claim relief as per
provisions of section
89 read with rule
21A |
4.
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Salary received by foreign national as an official of an
embassy, high commission, legation, consulate or trade representation of a
foreign state
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Fully Exempt if the corresponding official in that foreign country
enjoys a similar exemption
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5.
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Remuneration received by a non-resident foreign citizen as an
the employee of a foreign enterprise for services rendered in India, if:
a) Foreign enterprise is not engaged in any trade or
business in India
b) His stay in India does not exceed in aggregate
a period of 90 days in such previous year
c) Such remuneration is not liable to deduct from the
the income of employer chargeable under this Act
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Fully exempt
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6.
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Salary received by a non-resident foreign national for services
rendered in connection with his employment on a foreign ship if his total
stay in India
does not exceed 90 days in the previous year.
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Fully exempt
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7.
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Salary and allowances received by a teacher /professor from SAARC
member state (Subject to certain conditions).
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Fully Exempt
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