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Wednesday, November 1, 2017

Which pay and allowances heads are taxable under Income Tax ?

Which pay and allowances heads are taxable under Income Tax ? – PCDA Pune – Income Tax List of Taxable Elements of Pay

Which pay and allowances heads are taxable under Income Tax ? – Taxable Element of Pay
Income Tax : List of Taxable Elements of Pay – PCDA Pune
1. Taxable Element of Pay –
Sl. No.Taxable Elements of Pay
1.Pay in the Pay Band
2.Grade Pay
3.Military Service Pay
4.Dearness Allowance
5.Non-Practicing Allowance (if any)
6.Hazard/Special Hazard Pay
7.Para Allowance / Para Reserve Allowance/Special Commando Allowance
8.City Compensatory Allowance
9.Deputation (Duty) Allowance (If any)
10.Reimbursement of Furniture
11.Reimbursement of Water
12.Reimbursement of Electricity
13.Technical Allowance
14.Qualification Pay
15.Special Action Group Allowance (on posting to National Security Guard)
16.Technical Pay
17.Language Allowance
18.Qualification Grant
19.Language Award
20.Flying Allowance
21.Leave Encashment on LTC
22.Specialist Allowance
23.Test Pilot Allowance
24.Instructor Allowance
25.Flight Test Allowance
26.Security Allowance
27.Strategic Force Allowance
Note: Provisions are applicable equally for monthly payment of Allowances as well as arrears for the said head of Pay/Allowances.
2.    Non-Taxable Elements of Pay –
Sl No.Non-Taxable element of PayAuthorityLimit of Exemption
1.Gallantry AwardA.O. 46/79; U/S 10 (18) (i) of IT Acts w.e.f. 1947Fully Exempt
2.Entertainment AllowanceU/S 16 (ii) of IT Act w.e.f. 01/04/81A sums equal to 1/5th  of salary (excluding any allowance/benefit)
or Rs.5000/- per annum whichever is less
3.Leave Travel Concession (LTC)U/S 10 (5) of IT Act w.e.f. 01/04/89Actual Expenditure upto the limit of entitlement
4.Foreign AllowanceU/S 10 (7) of IT ActFully Exempt
5.Bhutan Compensatory Allowance (BCA)AO 395/74 and U/S 10 (7) of IT ActFully Exempt
6.Servant Wages Allowance alongwith BCAAO 395/74 and U/S 10 (7) of IT ActFully Exempt
7.Purchase of Crockery/Cutlery/ GlasswareU/S 10 (7) of IT ActFully Exempt
8.Outfit allowance on posting to EmbassyU/S 10 (7) of IT ActFully Exempt
9.Arrears of Cash Grant – Foreign Allowance (Nepal)U/S 10 (7) of IT ActFully Exempt
10.Myanmar AllowanceU/S 10 (7) of IT ActFully Exempt
11.Representation Grant for use of crockery setU/S 10 (7) of IT ActFully Exempt
12Encashment of Leave on retirement whether on
superannuation/voluntary retirement/release/invalidment etc.
U/S 10 (10AA) (i) of IT Act w.e.f. 01/04/78Fully Exempt
13.House Rent Allowance/House Rent Reimbursement
(HRA/HRR)
U/S 10 (13A) of IT Act w.e.f. 06/10/1964; Limit of
exemption as per Rule 2A of IT Rules
*Quantum of exemption is least of the following –
a) For Bombay/Kolkata/ Delhi Chennai
i) Allowance actually received.
ii) Rent paid
in excess of 10% of salary
iii) 50% of
salary
b) For other cities
i) Allowance actually received.
ii) Rent paid
in excess of 10% of salary.
iii) 40% of salary
14.Children Education AllowanceU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl No.5 of the IT Rules
Rs.100/- per month per child upto a maximum of 2
children.
15.Hostel SubsidyU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl No.6 of the IT Rules
Rs.300/- per month per child upto a maximum of 2
children
16.Siachen AllowanceU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl No.1 (II) of the IT Rules
Rs.7000/ per month w.e.f. 01/08/1997
17.Special Compensatory (Remote Locality) AllowanceU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.2 of the IT Rules
Category I – SCA ‘A’ – Rs.1300/- per month Category
III – SCA ‘B’ – Rs.1050/- per month. Category IV – SCA ‘C’
– Rs.750/- per month. Category VI – SCA ‘D’
– Rs.200/-
per month.
18.Compensatory Field Area Allowance (CFAA)U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl No.7 of the IT Rules
Rs.2600/- per month w.e.f. 01/05/1999
19.Compensatory Modified Field Area Allowance (CMFAA)U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl No.8 of the IT Rules
Rs.1000/- per month w.e.f. 01/05/1999
20.Any Special Allowance in the nature of Counter Insurgency Allowance (SCCIA)U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.9 of the IT Rules
Rs.3900/- per month w.e.f. 01/05/1999
21.Transport Allowance granted to meet expenditure for the purpose of commuting between place of residence and dutyU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.10 of the IT Rules
For whole of India – Rs.1600/- per month
22.Transport Allowance granted to a blind or orthopedically handicapped employee with disability of lower extremities, to meet expenditure for the purpose of commuting between place of residence and
duty
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.11 of the IT Rules
For Whole of India – Rs.3200/- per month
23.High Altitude Uncongenial Climate Allowance (HAUCA)U/S 10 (14) (ii) of IT Act and Rule 2BB (2) Table
Sl.No.13 of the IT Rules
For areas of
(a)Altitude of 9000 to 15000 feet (HAUCA ‘I) –
Rs.1060/- per month w.e.f. 01/05/1999. (b)Altitude above 15000 feet (HAUCA
‘II’ & ‘III) – Rs.1600/- per month w.e.f. 01/05/1999.
24.Highly Active Field Area Allowance (HAFA)U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.14 of the IT Rules
Rs.4200/- per month
25.Island (duty) Allowance granted to the members of Armed ForcesU/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table
Sl.No.15 of the IT Rules.
For Andaman & Nicobar and Lakshadweep group of
islands – Rs.3250/- per month inserted w.e.f. 29/02/2000.
26.Outfit Allowance  (Initial/Renewal)U/S 10 (14) (i) of IT Act and Rule 2BB (1) (f) of IT
Rules.
Fully Exempt
27.Compensation for the change of uniformU/S 10 (14) (i) of IT Act and Rule 2BB (1) (f) of
the IT Rules
Fully Exempt
28.Kit Maintenance AllowanceU/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of
the IT Rules
Fully Exempt
29.Uniform Allowance (MNS)U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of
the IT Rules
Fully Exempt
30.Special Winter Uniform AllowanceU/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of
the IT Rules
Fully Exempt
31.Reimbursement of Medical ExpensesU/S 17 (2) (viii) (v) of IT ActActual expenditure upto Rs.15000/- per annum.
32.Any payment from Provident FundU/S 10 (11) of IT ActFully Exempt
33.Payment of Compensation – Disability PensionCBDT F.No. 200/51/99- ITA1 dated 02 Jul 2001Fully Exempt
Note:
1. Provisions are applicable equally for monthly payment of Allowances as well as arrears for the said head of Pay/ Allowances.
2. *Salary for this purpose includes Pay in Pay Band + Grade Pay + MSP (w.e.f. 01 Sep 08) + DA + NPA (if any).
DISCLAIMER: The above provisions are with the understanding and interpretation of IT Act 1961/IT Rules as amended and instructions issued by CBDT from time to time. Rules, provisions, further amendments and clarifications are issued by IT department/CBDT only and this office does not have any role in framing the same except IT deductions at source with reference to them.

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