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
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a)
House Rent Allowance
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a)
Allowance granted to Government Employees outside India
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b)
Dearness Allowance
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b)
Special Allowance
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b)
Sumptuary allowance granted to High Court or Supreme Court Judges
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c)
Overtime Allowance
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c)
Allowance paid by UNO
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d)
Fixed Medical Allowance
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d)
Compensatory allowance to judge.
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e)
City Compensatory Allowance
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f)
Interim Allowance
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g)
Servant Allowance
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h)
Project Allowance
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i)
Tiffin/Lunch/Dinner Allowance
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j)
Any other Cash Allowance
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k)
Warden Allowance
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l)
Non-Practicing Allowance
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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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Income
Tax E-filing Return
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Process
of Filing Rectification Return
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Common
Errors in Filing Rectification Return
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Common
Mistakes in E-filling of Income Tax Return (ITR)
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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:
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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.”
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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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