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Allowances and tax exemption under the head salary

18 Jan

N Allowance Type Tax Exemption
1 House Rent Allowance (HRA) Minimum of the following will be tax free allowance1.A)For Metro cities-(Delhi, Chennai, Mumbai, Calcutta):-50% of Salary (Basic + DA + Fixed % of Commission on Sale)

B)Other Than Metro-40% of Salary

2.House Rent Allowance (HRA) received by employee by the company

3.Actual rent paid over the 10 % of Salary i.e =Rent paid to Landlord Less 10% of Salary (Basic + DA+ Fixed % on Sale)

2 Allowance paid to meet the cost of travel on tour on transfer
Note: Including sum paid for transfer/packing/transportation of personal effect
Exempted from tax up to the extent the allowance utilized for the travel
3 Allowance granted to meet the travel cost for performance of duty Exempted from tax up to the extent the allowance utilized for the travel
4 Allowance granted for transfer: daily allowance incurred on account of absence from his normal place of duty
Note: Granted for period of tour or for journey
Exempted from tax up to the extent the allowance utilized for the purpose
5 Allowance granted to meet the expenditure on helper for performance of duties of office Exempted from tax up to the extent the allowance utilized for the purpose
6 Allowance granted for encouraging the academic/research/professional pursuits Exempted from tax up to the extent the allowance utilized for the purpose
7 Allowance granted to purchase of uniform or maintenance of uniform for wearing during the performance of duties of an officer Exempted from tax up to the extent the allowance utilized for the purpose
8 Allowance granted to employee of transport business entity to meet his personal expenses during running of such transport 70% of total expense maximum to 10,000
9 Children education allowance Rupees 100 per child per month upto two children
10 Children hostel allowance Rupees 300 per child per month upto two children
11 Allowance granted to employee to  meet expenditure for commuting from residence to place of duty 800 Per Month
12 Allowance granted to employee who is blind or orthopaedically handicapped with disability of lower extremities to meet expenditure for commuting from residence to place of duty 1,600 Per Month
13 Underground Allowance granted to employee working in uncongenial, unnatural climate in underground mines 800 Per Month
14 Allowance granted to member of armed forces for work in highly active field area 4,200 Per Month
15 Allowance to  High Court Judge under section 22A(2), 22C  or to Supreme court judge under section 23B Exempted from tax
16 Entertainment allowance to Government empoyeeNote: Entertainment allowance first included in the salary under the head of salary and then deduction is given as per detail given left. Least of the following is exempted from tax
a) Rs 5,000
b)20% of Basic Salary
c)The Actual amount of entertainment allowance

Ref: http://allinfoindia.com/eLearning/Income%20tax/Type%20of%20allowance%20under%20the%20head%20salary.php

http://allinfoindia.com/eLearning/Income%20tax/hra%20rule%20limit%20exemption%20detail.php

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Posted by on January 18, 2013 in Salary Components, TDS

 

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