List of Non-Taxable Allowances | Salary Income


List of Non-Taxable Allowances | Salary Income

List of Non-Taxable Allowances | Salary Income | List of Non-Taxable Allowances | Salary Income | List of Non-Taxable Allowances | Salary Income | List of Non-Taxable Allowances | Salary Income | List of Non-Taxable Allowances | Salary Income

List of Taxable and Non-Allowances

a)   Entertainment Allowance
a)      House Rent Allowance
a) Allowance granted to Government Employees outside India
b)   Dearness Allowance
b)      Special Allowance
b) Sumptuary allowance granted to High Court or Supreme Court Judges
c)    Overtime Allowance
c) Allowance paid by UNO
d)   Fixed Medical Allowance
d) Compensatory allowance to judge.
e)   City Compensatory Allowance
f)    Interim Allowance

g)   Servant Allowance
h)   Project Allowance
i)     Tiffin/Lunch/Dinner Allowance
j)     Any other Cash Allowance

k)   Warden Allowance

l)     Non-Practicing Allowance

Partly Taxable Allowances
a) House Rent Allowance: House Rent Allowance is provided to employee to meet the accommodation expenses of the employee. It is taxable in the hands of employee after claiming exemption under section 10 (13A). The deduction is allowed in the following manner:
Least of the three:
1.       House Rent Allowance actually received by the employee
2.       Actual rent paid less 10% of Basic Salary
3.       50% of the Basic Salary in case the accommodation is in Metro else 40% of the Basic Salary if the accommodation is in a non metro
The Balance amount of House Rent Allowance received after claiming such deduction is taxable in the hands of the employee along with Salary under the head “Income from Salaries”.

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Conditions for claiming exemption of HRA :
Ø  HRA is available as an exemption to salaried employee only and not to the self employed people.
Ø  Rent must be actually paid by the employee.
Ø  If the employee resides at a rented accommodation for a part of financial year than the HRA is to be claimed on proportionate basis.
Ø  The basic Salary to be considered for the purpose of calculating HRA

includes:

o    Basic pay
o   Dearness allowance, if provided in terms of employment and
o   Commission as per fixed percentage of turnover.
Ø  The place of accommodation is of most importance i.e. whether he resides in Metro or Non-Metro.
b)  Special Allowance: Special Allowance paid to employee under section 14(i) is partly taxable in the following manner:
10(14)(i)any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of Section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, [as may be prescribed], to the extent to which such expenses are actually incurred for that purpose;
(ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, [ as may be prescribed and to the extent as may be prescribed];
Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or  employment unless such allowance is related to the place of his posting or residence.

Fully Exempt Allowances
a) Allowance granted to Government Employees outside India: Any Allowance granted by the Government of India to its employee working outside India, being a citizen of India is fully exempt from tax.
b) Sumptuary allowance granted to High Court or Supreme Court Judges: Sumptuary allowance are paid to High Court and Supreme Court Judges are fully exempt i.e. they are not to be taxed. The allowances are in the following manner:
          Allowance to High court judge under section 22C:  Section 22C of the High Court Judges (Conditions of Service) Act, 1954 states that “The Chief Justice and each of the other Judges of every High Court shall be entitled to a sumptuary allowance of seven thousand five hundred rupees per month and six thousand rupees per month, respectively.”
           Allowance to Supreme court judge under section 23B:  Section 23B of the Supreme Court Judges (Conditions of Service) Act, 1958 states that “In the calculation of the service for pension of a continuing Judge for the purposes of this Act, his previous service for pension as a Chief Justice or as a Judge of a former High Court in a Part B State, under the provisions of the High Court Judges (Part-B States) Order, 1953, or any other order or rule then applicable to him, shall be reckoned as service for pension as a Chief Justice or, as the case may be, as a Judge under this Act.”
  
c) Allowance paid by UNO: Allowance received by the employees of United Nations Organization in the following manner is exempt from tax.
“The United Nations, its property and assets wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case it has expressly waived its immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution.”
  
d) Compensatory allowance to judge: When a Judge receives Compensatory allowance under Article 222(2) of the constitution, such allowance is not taxable. Article 222(2) states that:

“When a Judge has been or is so transferred, he shall, during the period he serves, after the commencement of the Constitution (Fifteenth Amendment) Act, 1963, as a Judge of the other High Court, be entitled to receive in addition to his salary such compensatory allowance as may be determined by Parliament by law and, until so determined, such compensatory allowance as the President may by order fix.”

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