Meaning of allowance

Allowance is generally defined as fixed quantity of money or other substance given regularly in addition to salary for the purpose of meeting some particular requirement connected with the services rendered by the employee or as compensation for unusual conditions. It is fixed, pre-determined and given irrespective of actual expenditure

Under income tax act for exemption purpose allowances are categorized under three heads. One of the commonly used category is allowances which are based on actual amount expended by an employee. Here an attempt is made to understand types & nature of such allowances and per se the extent of exemption available for these allowances.

Special allowance prescribed as exempt under section 10(14)

When exemption depends upon actual expensiture by the employee – The following allowances are exempt under section 10(14) to the extent the amount is utilised for the specified purpose for which the allowance is received . In other words, in the cases given below the amount of exemption under section 10(14) is_

1.  The amount of the allowance ; or

2. The amount utilised for the specific purpose for which allowance is given,

whichever is low .

Exemption is available on the aforesaid basis in the case of following allowances-

Name of the allowance Nature of allowance
Travelling allowance/transfer allowance Any allowance (by whatever name called) granted to meet the cost of travel on tour or on transfer(including any sum paid in connection with transfer, packing and transportation of personal effects on such transfer).
Conveyance allowance Conveyance allowance granted to meet the expenditure on conveyance in the performance of duties of an officeNote pls.: Expenditure for covering the journey between office and residence is not treated as expenditure in performance of duties of the office and, consequently, such expenditure is not exempt from tax under this section. This allowance is covered separately under “Transport allowance” where a fixed exemption uptoRs 800 per month is given to such allowances in case of all employees. However, with introduction of finance act 2015 such exemption is increase to Rs. 1600 per month with prospective effect.

Example:

Conveyance allowances given to an employees for travelling done by employee for attending income tax hearing for presenting income tax hearing

Daily allowance Any allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
Helper allowance Any allowance (by whatever name called) to meet the expenditure on a helper where such helper is engaged for the performance of official duties.
Research allowance Any allowance (by whatever name called) granted for encouraging the academic research and other professional of official duties.
Uniform allowance Any allowance (by whatever name called) to meet the expenditure on the purchase or maintenance of uniform for wear during the performance of duties of an office.Pls. note: Benefit under this allowance can be taken only when a specific uniform is prescribed for office duties.

As stated earlier, the amount of exemption in the above cases isthe amount of allowance or the expenditure incurred for the specific purpose for which allowance is given,whichever is lower.

Kindly attention:

It is not open to the Assessing Officer to call for the details of expenses actually incurred by the assesse unless the allowances are disproportionately high compared to the salary received by the assessee or unreasonable with reference to the nature of the duties performed by the assessee.

So as far as allowance given are in normal proportion to the gross salary given to employee, employee need not to maintain the account and kept documents to proof is stand of actual expenses incurred for the aforesaid purpose. A simple declaration is enough to claim such exemption.

Case study

During the previous year 2013-14, the following allowances are given to X by the employer company –

allowancesBy: Sensys Technologies- For any further information or query you can be reached to experts of our panel at contact@sensysindia.com

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19 responses to “Salary Income- Exempt Allowance under section 10(14)”

  1. Basant Kalra says:

    Exemption on Transport allowance is withdraw from AY 2019-2020 . Kindly explain this exemption not available for Handicapped person.

    Please clarify

  2. aalekh sinha says:

    I am geeting special area allowance As my place of posting is in tripura… I am geeting rs 6500 as allowance. Please tell me whether i am elegible for tax exempt on this income.

  3. Amit Bansal says:

    Nicely Explained, Is there any maximum limit exemption under section 10(14).

  4. rana says:

    hello sir ,
    mobile allowance is taxable in govt secter
    or not

  5. ranjeet sinha says:

    I am receive transport allowance 22200 per annum which amount exempted

  6. P S Pratihar says:

    we get 10% extra allowance for 24 hours duty for resdidential school, for taking care of children it is extra duty after school hours , is it taxable or not and under what rule of IT

  7. DR M H SIDDIQUI says:

    REMUNERATION OF EVALUATING PH.D THESIS OF RESEARCH SCHOLARS BELONG TO FOREIGHN COUNTRIES IS TAXABLE OR NOT
    THANKS

  8. harish joshi says:

    can special duty allowance is exempted for tax.

  9. harish joshi says:

    can special duty allowance is exempted for tax…. for a salary person?

  10. Jayaraman VP says:

    I have spent Rs 50000 towards flat repairs during 2016- 17..How I can claim exemption under I.T rules. Pl clarify.
    Total rent rec’d per annum : Rs 120000.

  11. Vijay thakur says:

    Incomplete information u/s 10(14).

  12. M K Bhat says:

    One how receives Rs. 800/- + D.A Transport allowances what will be limit for deduction from salary

    • SUNIL KUMAR SINHA says:

      Sir I am PH candidate getting 3600 rs per month as TA Kindly tell how much rebate would I get under Section U/S 10.

  13. Syed Athaulla says:

    Sir,
    I will become a senior citizen on 10.04.2017 (60 years). Whether I am eligible for tax slabs applicable for senior citizens during the F.Y.2017-18

  14. G Amarnath lal says:

    sir where i have show this amount while efiling ex.80c,80ccetc

  15. Poonam Rohila says:

    Hello Sir I am Poonam Rohila , if i travel in my personal car, so can i apply for Leave travelling allowance , what bills can i show at this time

  16. sam says:

    I was sponsored by Company A in 2014 for 1 year part time academic program under a 2 year bond, now i want to join company B which is ready to pay this amount to me so that i can payback to company A.
    Company B is deducting TDS on the payout and not treating it as reimbursement under Section 10 Rule 2BB since the fee was paid to the academic institute directly by company A.

    What are the conditions to avail the above clause, can this be transferred from old employer to new employer.

    Please guide me in this case.

  17. AAAA says:

    NICE ARTICLE

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