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Income Tax : List of Taxable and Non-Taxable Elements of Pay


Income Tax : List of Taxable Elements of Pay 

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 Pay
Authority
Limit of Exemption
1.
Gallantary Award
A.O. 46/79; U/S 10 (18) (i) of IT Acts w.e.f. 1947
Fully Exempt
2.
Entertainment Allowance
U/S 16 (ii) of IT Act w.e.f. 01/04/81
A 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. 01/04/89
Actual Expenditure upto the limit of entitlement
4.
Foreign Allowance
U/S 10 (7) of IT Act
Fully Exempt
5.
Bhutan Compensatory Allowance (BCA)
AO 395/74 and U/S 10 (7) of IT Act
Fully Exempt
6.
Servant Wages Allowance alongwith BCA
AO 395/74 and U/S 10 (7) of IT Act
Fully Exempt
7.
Purchase of Crockery/Cutlery/ Glassware
U/S 10 (7) of IT Act
Fully Exempt
8.
Outfit allowance on posting to Embassy
U/S 10 (7) of IT Act
Fully Exempt
9.
Arrears of Cash Grant - Foreign Allowance (Nepal)
U/S 10 (7) of IT Act
Fully Exempt
10.
Myanmar Allowance
U/S 10 (7) of IT Act
Fully Exempt
11.
Representation Grant for use of crockery set
U/S 10 (7) of IT Act
Fully Exempt
12
Encashment of Leave on retirement whether onsuperannuation/voluntary retirement/release/invalidment etc.
U/S 10 (10AA) (i) of IT Act w.e.f. 01/04/78
Fully Exempt
13.
House Rent Allowance/House Rent Reimbursement(HRA/HRR)
U/S 10 (13A) of IT Act w.e.f. 06/10/1964; Limit ofexemption 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 paidin 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 Allowance
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl No.5 of the IT Rules
Rs.100/- per month per child upto a maximum of 2children.
15.
Hostel Subsidy
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl No.6 of the IT Rules
Rs.300/- per month per child upto a maximum of 2children
16.
Siachen Allowance
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl No.1 (II) of the IT Rules
Rs.7000/ per month w.e.f. 01/08/1997
17.
Special Compensatory (Remote Locality) Allowance
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl.No.2 of the IT Rules
Category I - SCA 'A' - Rs.1300/- per month CategoryIII - 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) - TableSl 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) - TableSl No.8 of the IT Rules
Rs.1000/- per month w.e.f. 01/05/1999
20.
Any Special Allowance in the nature of CounterInsurgency Allowance (SCCIA)
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl.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 duty
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl.No.10 of the IT Rules
For whole of India - Rs.1600/- per month
22.
Transport Allowance granted to a blind ororthopedically 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) - TableSl.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) TableSl.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) - TableSl.No.14 of the IT Rules
Rs.4200/- per month
25.
Island (duty) Allowance granted to the members ofArmed Forces
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) - TableSl.No.15 of the IT Rules.
For Andaman & Nicobar and Lakshadweep group ofislands - 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 ITRules.
Fully Exempt
27.
Compensation for the change of uniform
U/S 10 (14) (i) of IT Act and Rule 2BB (1) (f) ofthe IT Rules
Fully Exempt
28.
Kit Maintenance Allowance
U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) ofthe IT Rules
Fully Exempt
29.
Uniform Allowance (MNS)
U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) ofthe IT Rules
Fully Exempt
30.
Special Winter Uniform Allowance
U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) ofthe IT Rules
Fully Exempt
31.
Reimbursement of Medical Expenses
U/S 17 (2) (viii) (v) of IT Act
Actual expenditure upto Rs.15000/- per annum.
32.
Any payment from Provident Fund
U/S 10 (11) of IT Act
Fully Exempt
33.
Payment of Compensation - Disability Pension
CBDT F.No. 200/51/99- ITA1 dated 02 Jul 2001
Fully 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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