CA Aashish Ramchand

The following allowances are exempt under section 10(14) to the extent the amount is utilized 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 –

a). the amount of the allowance ; or

b). the amount utilized for the specific purpose for which allowance is given, whichever is lower.

Exemption is available on the aforesaid basis in the case of the 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 the travel on tour or on transfer (including any sum paid in connection with transfers, packing and transportation of personal effects on such transfer).
Conveyance Allowance Conveyance allowance granted to meet the expenditure on conveyance in performance of duties of an office (it may be noted that 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).
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 performances of officials duties.
Research Allowance Any allowance (by whatever name called) granted for encouraging the academic research and other professional pursuits.
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.

TAX TREATMENT OF OTHER COMMONLY RECEIVED ALLOWANCES

1)      City compensatory allowance – It is always taxable

2)      Tiffin allowance – It is always taxable

3)      Fixed medical allowance – It is always taxable

4)      Servant allowance – It is taxable

5)      Allowance to High Court and Supreme Court Judges – It is not chargeable to tax

 (Author is CA by profession & Co-Founder of  Make My Returns (www.makemyreturns.com) & can be reached at connect@makemyreturns.com)

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0 responses to “Special Allowances Where Exemption Depends Upon Actual Expenditure By Employee”

  1. sridhar says:

    i am having a ppf account for more than10yrs and i would like to know wheather i can withdraw some amt as specified and re invest the amt again in the ppf to get tax benefit

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