I

NCOMEFROM SALARI
ES

 SALARI
ES

Anyremunerationpaidbyanempl oy ert
ohi sempl oyeei
nconsi
derati
onofhi s
servi
cesiscall
edsalary.Itincl
udesmonet aryvalueornonmonet ar
yv al
ueof
benefi
ts and faci
l
iti
es pr ovi
ded byan empl oyerwhich aretaxable.Any
amountreceivedothert hanf r
om empl oyercannotbet ermedassal ary.For
e.g.
,AMemberofPar li
ament/aMLAi snott reatedasanempl oyeeoft he
Governmenttheref
oresal aryandallowancer eceivedbyhimisnotchargeable
totaxundertheheadi ncomef rom salar
y.

Undersect
ion15,t
hef
oll
owi
ngi
ncomesar
etaxabl
eundert
hehead
‘
Sal
ari
es’
:

(
a)The salary due from an empl oyerorf ormerempl oyert o an
assesseei ntheprevi
ousy ear
,whetherpai
dornot;
(
b)Thesal arypaidoral l
owedt ohi mint heprevi
ousy earbyoron
behal
fofanempl oyeroraf ormerempl oy
erthoughnotdueor
befor
eitbecomesduet ohi m;
(
c)Anyarrearofsalarypai
doral l
owedt ohi
mi ntheprevi
ousy earbyor
onbehal fofanempl oy eroraf or
merempl oyer
,ifnotchar gedto
i
ncomet axforanyearl
ierprev
iousyear.

Undert
heprov
isionsofthi
ssecti
ontheamountofsalar
ydueintheyear,
amountofadv ancesal aryr
ecei
vedandt heamountofar r
ear
sofsal ar
y
recei
vedduri
ngtheyearf r
om t
hepresentorpastempl
oyerar
etobeincluded
i
nt hi
shead.

I
fanysal arypaidinadvanceisincl
udedi nthetot
alincomeofany
per
sonforanyprevi
ousyear,i
tshal
lnotbei
ncludedagai
ninthetotali
ncome
oft
hepersonwhent hesal
arybecomesdue.

Anysalar
y,bonus,
commissi
onorremuner
ati
onduetoorrecei
vedbya
par
tnerofaf i
rm from thef
ir
m shal
lnotber egar
ded assalaryfort
he
pur
posesofsecti
on15.

1
SomeI
mpor
tantPoi
ntsr
egar
dingSal
ari
es

1.Salari
es.Ev erykindofr emunerat
ionofev eryki
ndofservant,publ
i
cor
pri
vate,andhowev erhi
ghlyorlowlyplacedhemaybe, iscoveredunder
thescopeoft histerm usedintheIncomeTaxAct .I
tmeansthatforthe
purposesoft heI ncomeTaxAct ,thereisnodi sti
nct
ionbetweent he
wagesofl abourerandsal ar
iesofhighoffi
cial
s.

2.For
eignSal
aryandPensi
on.Sal
aryandpensionr
ecei
vedf
rom f
orei
gn
gov
ernmenti
staxabl
eundert
hehead‘Sal
ari
es’
.

3.Rel
ationshi
pofempl oy
erandempl oyee. Itisveryessentialfora
paymentt ofal
lundert he head ‘Sal
aries’thatthe r
elat
ionship of
employerandemployeemustexi stbetweent hepay
erandpay ee.Every
ser
vantisanemployeebutanagentmayormaynotbeanempl oyee.

4.Salariesandpr ofessi
onalincome.Wher et heempl oymenti smerely
i
nci dentaltothe exerci
se ofa pr ofession the income from such
empl oymentwoul dbepr ofessi
onalincome,t axableundert hehead
“profitandgai
nsofbusinessorprofession”.Whenaper sonoccupi
esa
regularpostoroffi
ceamount i
ngtoserv i
ce, i
tisempl oymentasdist
inct
from mer eengagementinthecourseoft hepr of
ession.

5.Receipt
sfrom per sonot herthanempl oy
er .Perquisitesorpr ofit
sor
anyremuner at
ionr eceiv
edf rom personothert
hant heempl oyerwoul d
betaxableundert hehead‘ I
ncomef r
om OtherSour ces’ev eni fthey
accr
uet ot heempl oyeebyr easonofhisempl oyment .Forex ampl e,
remunerat
ionr eceivedbyapr of
essorofacol l
egef oract i
ngasan
examineri
naUni versi
tyorBoar d.

6.Pay mentmadeaf tercessati

onofempl oyment.Paymentmadebyan
empl oyertohi
sempl oy
eeaf t
erthecessationofhisemploy
mentisalso
taxableunderthehead‘Salar
ies’
.Itistaxableunderthi
sheadbecause
i
tr epresent
sremunerat
ionforservi
cesrenderedinthepast
.

7.Paymentmadetoemployeeort othewidow orl

egalhei
r.a)Lump-
sum paymentmade gratui
tousl
y orby way ofcompensat i
on or
other
wiset
othewi
dow orotherlegalhei
rsofanemployee,whodi
es

2
 whi
l
est
il
li
nact
iveser
vice,
wil
lnotbet
axabl
easi
ncome.

b)
Whereaper sonorhisheirr
eceivesexgr
ati
apaymentfr
om t
heCent
ral
Gover
nment/St at
eGov ernment/LocalAut hor
it
y/Publi
cSector
Undert
aking,consequentuponinjur
ytotheper
son/deathofaf
amily
member ,
whi l
eondut yisnotl
iabletoi
ncometax.

8.Pension. Pensionr eceived byanempl oyeeaft

erhi sreti
rementi s
taxabl
eassalary.Pensionear nedandreceiv
edabroadi st
axableonlyin
thecaseofordinaryresident,whetherr
emi t
tedt
oI ndiaornot.Pension
paidbyaf or
eigngov ernmentt oitsemployeesservinginIndi
aisal so
taxabl
e.

9.Tax-f
reesal ary.Whenasal ar
yispai dtax-
free,theemployeehasto
i
ncludeinhist ot
ali
ncomet hegrosssalar
y,i.
e.,t
heaggregateoft
henet
sal
aryr eceived pl
ust he amountoft axpai d on hi
sbehal fbythe
employer,exceptundertheprovi
sionsofSec.
10( 10CC).

10. Deducti
ons by empl oyer. I f
,an empl oyer makes cer
tai
n
deducti
ons outoft he sal
arypay ableto an employ
ee,amountso
deductedisdeemedtober eceivedbytheemployeeandtheamountso
deductedi
salsotakenasapplicati
onofincomebytheemployee.

11. SalaryofaMemberofParli
ament
.Thisisnotchar
geabl
eunder
thehead‘ Sal
ari
es’
,asaMemberofParli
amentisnotanemployeeof
the Government.I
tistaxabl
e undert
he head ‘
I
ncome fr
om Other
Sources’
.

12. SalaryofaPartner.Anysalaryrecei
vedbyapar tnerfr
om the
fi
rminwhi chheisapartneri
snotchargeabl
eunderthehead‘Sal
ari
es’
.
I
ti staxable underthe head ‘Pr
ofi
ts and Gains ofBusiness or
Prof
ession’.

13. Fami l
yPension. Anyf
amilypensi
onrecei
vedbythewi
dow or
l
egalheir
sofadeceasedempl oy
eeistaxabl
eundert
hehead‘
I
ncome
f
rom OtherSour
ces’.

14. Volunt
aryf
oregoing-Appl
icat
ionofSalar
y.Volunt
aryf
oregoi
ng
ofsal
arybyanemployeeissi
mpl
yanapplicat
ionofi
ncomebyhim and,

3
 t
herefore,anyvol
untaryfor
egoi
ngofsal
aryi
staxabl
ewheni
tisdue,
whetherpaidornotu/s15.

15. Sal
aryGradeorScal eofPay .Salarygrademeanst hatatwhat
star
ti
ngsalaryanyempl oyeeist obeappointedanddur i
ngtheenti
re
servi
ceperi
od(i
fthereisnor evi
sionofgradeornopr omoti
on),
whatwil
l
behisincrementpery earandwhatwi llbehismaxi mum salar
yaf
ter
whichther
ewi l
lbenoi ncr ement.Heresalar
ymeansbasi csal
ary.
Forexample,8,
000-250- 10,000-
375-12,
000-450-18,
800.

16. Sal
ary from t he former empl oyer, present employer or
prospecti
veempl oy
er .Thesal
aryi
st axableir
respecti
veofwhetheri
tis
receiv
edfrom t
hepr esent,
pastorprospectiv
eempl oyer.Asanyi
ncome
receiv
edbyt hereci
pientintherel
ationshipofempl oyerandemployee
i
st axabl
eundertheheadi ncomefrom salari
es.

17. Salaryf r
om mor ethanoneempl oyer.Sal
aryandotherserv
ice
benef
it
sr eceiv
edbyanassesseef r
om mor ethanoneemployerinthe
samefinancialyearar
etaxabl
eassal
aryintheyearofr
ecei
pt.

18. Salaryi
staxableondueorr ecei
ptwhicheverisearl
ier
.The
sal
aryincomeistaxabl
eei
therondueorreceiptbasi
swhicheveri
s
ear
li
er.

19. Gr
ossSal aryi
st axable.Whi
letaxi
ngthesalar
yincomeitisthe
grosssal
arythatistaxednott henetortakehomesal ar
y.Henceany
amountifdeductedf
rom gr osssal
aryhastobeaddedtonetsal
ary
.

20. Duedat
eofSal
ary
.Fol
l
owi
ngar
ethegener
alr
ulesr
egar
dingt
his:
(a)I
nthecaseofempl oyeesoft
hegovernmentandsemi -government .
Salar
yfor apar
ti
cul
armont hi
sdueonthef i
rstofthenextmont h.Thus,
i
nsuchacase,salaryforthemonthofMar choft heprecedingfinancial
yearuptot
hesalar
yf orthemonthofthecur rentfi
nanci
aly eari
st aken
i
ntoaccount.

(b) I
nthecaseofemployeesofbanksandnon- gover
nmentbodi
es.
Sal
aryforapar
ti
cul
armont
hi sdueonthelastdat
eofthesamemonth.
Thus,i
nsuchacasesalar
yf orApr
iloft
hecur r
entfi
nanci
aly
earupto

4
 t
hesalaryforthemont
hofMar
choft
hecur
rentf
inanci
aly
eari
staken
i
ntoaccount.
Def
ini
ti
ons:
SALARY(
Sec.17(
1))
:Sal
aryi
ncl
udes:

1.Wages;
2.anyannui t
yofpensi on;
3.anygr atuity;
4.anyf ees,commi ssion,per quisites, profitinl ieuofsal ar
yori n
addit
iont oanysal aryorwages;
5.anyadv anceofsal ary;butnotl oanforpurchasi ngacar ,
scooterora
houseet c.
6.anypay mentr eceivedbyanempl oyeeinr espectofanyper iodof
l
eavenotav ai
ledofbyhi m;
7.employ er ’
scont ri
butiont owar dsr ecogni
zedpr ovi
dentfundinexcess
of12% oft heempl oy ee’
ssal aryandi nterestonpr ov i
dentfundi n
excessof9. 5%r ate.
8.theaggr egateofal lsumscompr i
sedint het ransf
err
edbal ancet o
theext entt owhi chi tischar geabl etotaxundersub- r
ule(4)ofRul e
11.
9.the cont ri
bution made byt he Cent ralGov ernmentoranyot her
employ eri nthepr eviousy ear ,toaccountofanempl oyee,undera
pensionscheme.

Sal
ary

Basi
csal
ary+al
l
owances+Per
qui
sit
es+Pr
ofi
tsi
nli
euofsal
ary

GrossSal
ary
Less:(
Deducti
onsu/s16)

St
andar
dDeduct
ion +Ent
ert
ainmentAl
l
owance + Empl
oymentTax
= Taxabl
esal
ary

Di
ff
erentf
ormsofsal
ary
Di
ff
erent f
orms of sal
ary ar
e:Leav
e sal
ary
,compensat
ion f
or

5
r
etr
enchment
,feesandcommi
ssi
on,bonus,deat
h-cum-
ret
ir
ementgr
atui
ty,
commut
ati
onofpensi
on,r
ecei
ptsbyempl
oyeesofpubl
i
csect
orandot
her
compani
esatt
imeofv
olunt
aryr
eti
rement
,annui
ty,sal
aryandpensi
onf
rom
UNOandot
herf
orei
gnpensi
on.

ALLOWANCES

Paymentincashmadebyanemployertohisemploy
eesmont hl
y,ot
her
thansalar
y,i
scalledal
l
owance.Iti
safixedsum ofmoneypai dregul
arl
yin
addit
iontosalaryfort
hepurposeofmeetingsomepar t
icul
arrequir
ement
connectedwit
htheserv
icesr
ender
edbyanempl oyee.

ForthepurposeofI
ncomet
ax,Al
l
owancesar
edi
vi
dedi
ntot
hreecat
egor
ies.
Theyare:

1.Taxabl
eAll
owances
2.All
owancesExemptuptoSpeci
fi
edLi
mit
3.Ful
lyexempt
edAllowances

Taxabl
eAl
lowances

1.DearnessAl l
owance, Additi
onalD. AandDear nessPay :
Thisisav er
ycommonal l
owancet heseday sonaccountofhi ghpr i
ces.
Somet i
mesaddi ti
onalD. Ai salsogi ven.Itisincludedint heincome
from salaryandi staxableinfull.Somet i
mei ti
sgi venundert heter
ms
ofempl oy mentandsomet i
meswi thouti
t.Wheni tisgivenundert he
terms of empl oyment i tisi ncluded in salaryf or purposes of
determining t he exempt i
on limits ofHRA,RPF,gr atui
ty and for
determiningt hevalueofr ent
-fr
eehouseandi sal sotakenintoaccount
forthepur posesofr et
irementbenef it
s.
Somet imesD. Aisgi venas‘ DearnessPay ’.Itmeanst hatitisbeing
givenundert hetermsofempl oyment .

2.Fi
xedMedi
calAl
lowance.I
tisf
ull
ytaxabl
e.

3.Ti
ff
in Al
lowance. I
tis gi
ven f
orl
unch and r
efr
eshment
stot
he

6
 employ
ees. I tis al
so cal
led MealAl
l
owance and Ref
reshment
Al
lowance.I
tisful
l
ytaxabl
e.

4.Ser
vantAl
lowance. I
tisful
l
yt axabl
eev
eni
fiti
sgi
vent
olow pai
d
employ
ee,
notbeinganof
fi
cer.

5.Non-Practi
cing All
owance. Itisgeneral
lygiven tothosemedical
doctorswhoar eingover
nmentservi
ceandtheyarebannedfr
om doing
pri
vatepracti
ce.Iti
stocompensat
ethem f
orthisban.Iti
sful
l
ytaxable.

6.HillAll
owance.Iti
sgivenemployeesworki
nginhi
ll
yareasonaccount
ofhi ghcostofliv
ingi
nhi ll
yareasascompar et
opl ai
ns. I
tisfull
y
taxable,I
fthepl
aceisl
ocatedatlesst
han1,000meterhei
ghtf
rom sea
l
ev el
.

7.War den Al
lowance and proctorAll
owance. These al
l
owancesare
giv
eni neducati
onalinst
it
utionsforworki
ngasWar denofthehostel
and/orwor ki
ngasPr octorintheinst
it
uti
on.Theseallowancesar
e
ful
lytaxabl
e.

8.Deputati
onAllowance.Whenanempl oyeeissentfr
om hisper
manent
placeofservi
cetosomeotherplaceorinsti
tuti
onondeputati
onf
ora
temporaryper
iod,hei
sgi
venthi
sallowance.I
tisful
l
ytaxabl
e.

9.Overt
imeAll
owance:Whenanempl oy
eeworksforext
rahour
sover
andabovehisnormalhoursofdut
yheisgi
venov
erti
meall
owanceas
ext
rawages.Iti
sful
lytaxabl
e.

10. Ot
herAl l
owances: Ther e may be sev eralot hertypes of
al
lowances,f
orexample,FamilyAll
owancet oarmedper sonnelwhileon
fi
eld wi
thout famil
y,ProjectAllowance,Mar ri
age Allowance,Rur al
All
owance,Cit
yCompensat oryAll
owance, Tel
ephoneAl l
owance, Di
nner
All
owance,Healt
hAllowance,HolidayAllowance,SpecialQualif
icati
on
All
owance,et
c.Thesearetaxableunlessspecif
ical
lyexempt ed.

Al
lowancesexemptupt
ospeci
fi
edl
imi
t

7
1.HouseRentAl lowance:Anallowancegr
anted t
o anassesseebyhi s
empl oyertomeetexpenditur
eincurr
edonpay mentofrentinrespectof
residenti
alaccommodati
onoccupiedbyhim exemptfr
om taxtoacer tai
n
extent.

Rul
e2Apr
escr
ibedt
hatt
hel
eastoft
hef
oll
owi
ngamount
sshal
lbeexempt
:

(a)HouseRentAllowanceactual
lyr
eceiv
edbyt heassessee;or
(b)Excessofrentpai
dbyt heassesseeover10%ofsal ar
yduet ohimforthe
rel
evantperi
od;or
(c) ( i
)iftheaccommodat i
onissi t
uatedatMumbai ,Kolkat
a,Delhior
Chennai–50%ofsal ary
duetotheassessee,and
(
ii
)iftheaccommodat ionissi
tuat
edatanyot herplace–40%ofsal ary
duetotheassessee.

I
ncaseanempl oy
eeisl
i
vingi
nhi
sownhouseandisgett
ingHRAorisli
vi
ng
i
nahousef orwhi
chhei
snotpay
inganyr
ent
,ful
lamountofHRArecei
vabl
e
i
staxabl
e.

I
nthi
srul
e-( i
)‘ Sal
ary’i
ncludes dearness all
owance,ifthe ter
ms of
employ mentsoprov i
de.Ital
soincludest
hecommi ssi
onbased
on f i
xed percentage of turnover,but excl
udes all ot
her
al
lowances,perqui
sitesandbonus.

(
ii
) ‘
Relevantperiod”means t
he peri
od duri
ng whi
ch the said
accommodat i
on wasoccupied bytheassessee dur
ing t
he
previ
ousyear.Itmeansthatthesalaryoftheperiodduri
ng
whichrent
edaccommodationisnotoccupi
edbytheemploy ee
will
beexcluded.

HouseRentAl
lowance(
HRA)

Employeewhoisresi
dingi
nhisown Employeewhoispayi
ng
r
entf
orr
esi
dent
ial
houseorinahousewherehedoesn’t accommodati
on
payanyrent
,ent
ir
eHRAi staxabl
e
8
 Leastofthefoll
owingisexempt:
a)HRAact ual
lyrecei
ved
b)Rentpaid–10%ofsal ary
c)40% ofsalaryOR (50% i
n
caseresi
dinginDelhi,
Mumbai ,Chennai
orKolkat
a)

2.Entert
ainmentAll
owance:I
tisanall
owancegivenbyanempl oy
ertohis
employee.Itisf
ir
sti
ncl
udedinthei
ncomefrom sal
aryundersect
ion15,and
thendeductioni
sall
owedtoagover
nmentemployeeundersect
ion16(i
i
).

3.Speci
alallowance formeet i
ng certai
n expendi
ture[Secti
on 10(14)
]:
Specialal
lowanceswhi ch ar
eexemptf r
om taxwhilecomputing i
ncome
underthehead‘sal
ari
es’havebeennoti
fi
edbytheCentralGov
ernment.Ther
e
aretwotypesofspeci
alall
owances.Theyare:

A.Thosewhi chareexcl
usiv
elyt
obei ncurr
edintheperf
ormanceofthedut
ies
ofhisoffi
ce.Theseareexempttot
heext entact
uall
yspent.
B.Thosewhi charetomeett hepersonalexpenses.Theseareexemptupto
specif
iedli
mit.

A.Thosewhi char eexclusivelytobeincurredi ntheperformanceoft he

dutiesofhisoffi
ceSec.10(14)( i
):
Special al
lowance whi ch i
s granted to meet expenses whol ly
,
necessaril
yandexcl usi
velyincurr
edi nt
heper f
ormanceoft heduti
esofan
off
icewi llbeexemptf rom t ax,t
ot heextenttowhi chsuchexpensesar e
actuall
yincur
redforthatpurposeandnot i
fi
edbyt heCentr
alGov er
nment.

Thefol
lowi
ng speci
alal
lowanceshav
ebeennot
if
iedasexemptu/
s
10(
14)(i
):

1)Travel
li
ngAl l
owance:Theall
owancegrantedt
omeett hecostoft
rav
elon
tourorontransfer
.Thecostoftr
avelontr
ansferincl
udesanysum paidi
n
connecti
onwi thtr
ansf
er,packi
ngandt r
ansportati
onofpersonalef
fect
s
onsucht r
ansfer.

9
 2)Dai
lyAllowance:Anyal
lowance,gr
antedf ortheperi
odofjour
neyontour
orontransf
ertomeettheor di
nar
ydailychargesincurr
edbyanemployee
onaccountofabsencefrom hi
snormal pl
aceofdut y
.

3)Conv
eyanceAll
owance:Theal
l
owancegr
ant
edtomeettheex
pendi
tur
e
i
ncur
redonconv ey
anceintheper
for
manceofdut
iesofanoffi
ceor
empl
oymentofprof
it
.

4)Hel
perAll
owance:Any all
owance gr
ant
ed to meetthe ex
pendi
tur
e
i
ncur
redonahelperwher
esuchhel
peri
sengagedfort
heper
for
manceof
of
fi
cial
dut
ies.

5)Academi
c Allowance:Any al
lowance granted for encour
agi
ng t
he
academi
c,r
esearchandot
herpr
ofessi
onalpursui
ts.

6)Uni
form Al
lowance:Anyal lowance grant
ed t
o meetthe expendit
ure
i
ncurr
edonthepurchaseormai ntenanceofuni
for
msforwearduringthe
per
for
manceofoffi
cialdut
ies.

B.Speci
alAl
lowancet
omeett
heper
sonalexpenses.

Anysuchal l
owancegrantedtotheassesseeei t
hertomeethisper sonal
expensesatt
hepl acewher
et hedut
iesofhi soff
icear
eordi
nari
lyperf
ormedby
him oratapl acewhereheor di
nari
lyresides,ortocompensatehimf orthe
i
ncreasedcostofl i
vi
ng,wi
llbeexemptf rom tax,tot
heextentnoti
fi
edbyt he
Central
Government.

10
1)Speci
alCompensatory(Tr
ibalAreas/Schedul
ed Ar
eas/AgencyAr eas)
All
owance:Theexempti
onisavai
labl
e@ Rs.200p. m.inMadhy aPr
adesh,
Tamil
nadu,U.P,
Karnat
aka,
Tri
pura,Assam,WestBengal,Bi
har,
andOrissa.

2)Anyal l
owancegr antedtoanemployeeworki
nginanyTr ansportSy
stem:
Anyallowancegrantedt oanyemployeeworki
nginanytransportsyst
em to
meethi spersonalexpendit
uredur
inghisdutyperfor
medi nt hecourseof
runni
ngofsucht ransportfr
om oneplacetoanotherpl
acei sexemptinthe
whole ofIndia upto 70% ofsuch all
owance orRs.10, 000 permont h,
whicheveri
sless.

3)Chi
ldr
enEducat
ionAll
owance:I
tisexempti
nthewholeofI
ndi
a@ Rs.
100permont
hperchi
lduptoamaxi
mum oftwochi
ldr
en.

4)Chi
ldr
enHost elAll
owance:Anyall
owancegrant
edtoanemployeeto
meett
hehostel
expenditur
eonhischi
l
disexemptint
hewhol
eofI
ndia@ Rs.
300p.
m perchi
l
dupt oamaximum oftwochi
ldr
en.

5)Transport Allowance: The transpor

t allowance granted by t he
Governmenttoitsempl oy
eesorbyanempl oyertoempl oy
ees,bywhat ever
namecal l
ed,t o compensatethem forthecosti ncur
red on accountof
commut i
ngbet weenthepl aceofresi
denceandt heplaceofdut y,wil
lbe
exemptsubj ectt o a maximum ofRs. 1600p.m.( No exemption,w.e.f
assessmetyear2019-20).

However,iftheemployeeisbl
indoror t
hopedi
cal
lyhandi
cappedwit
h
di
sabi
li
tyoflowerext
remit
ies,t
het
ranspor
tall
owanceshal
lbeexemptupt
o
Rs.3,
200pm.

11
 6)Undergr
oundAl l
owance:I tisgr
antedtoanemployeewhoiswor
kingi
n
uncongeni
al,unnat
uralcli
mat ein under
ground mi
nes.I
twil
lbeexempt
subj
ecttoamaxi mum ofRs.800pm.

7)Compensat
oryFi
eldAr
eaAl
lowance:I
tisexemptupt
oRs.2,
600p.
m

8)Compensat
oryModi
fi
ed Fi
eld Ar
eaAl
lowance:I
tisexemptupt
o Rs.
1,
000p.m

9)Count
er-
insur
gencyAl
lowance:I
tisexemptupt
oRs.3,
900p.
m

10) Hi
ghAl
ti
tudeAl
lowance:

(
a)Foral
ti
tudeof9,
000t
o15,
000f
eet–I
tisexemptupt
oRs.
1,060p.
m

(
b)Foral
ti
tudeabov
e15,
000f
eet–I
tisexemptupt
oRs.1,
600p.
m

11) Hi
ghl
yAct
iveFi
eldAr
eaAl
lowance:
Iti
sexemptupt
oRs.
4,200p.
m.

12)I
slandDut
yAl
lowance:
Iti
sexemptupt
oRs.3,
250pm

Ful
lyExempt
edAl
lowances:

(1)Forei
gnAllowance:Thisal
lowanceisusuallypai
dbyt hegov er
nmentt oan
I
ndiancit
izenoutsi
deIndiaforrenderi
ngservi
ceabr oad.I
tisnottaxableatal
l.
Theremaybesev eralty
pesofforei
gnallowances,e.g.,Overseas Allowance,
Chil
drenEducati
onAllowance,
CarAl l
owance,Entert
ainmentAll
owance, et c.

12
Thi
sexempt
ioni snotavail
abl
etonon-
gov
ernmentempl
oyeesandt
othose
whoar
enotcit
izensofI
ndia.

(2)Sumptuar
yAllowanceto Hi
ghCourtorSupremeCourtJudges.Such
all
owancegi
vent
ohigh court
/supr
emecour
tjudgesi
sful
lyexemptfr
om
tax.

(3)Al
lowancef r
om UNO:Al
l
owancepai
dbyaUNOt
oit
sempl
oyeesi
sful
l
y
exemptfr
om tax.

(4)Per-
diem Al
lowance:I
fper-di
em all
owancei
spaidf
orthepurposesofuse
ofhotel
,boardi
ngandlodgingfaci
li
ti
estoanemploy
eeanysur
plusaccrui
ngto
himfrom suchall
owanceisexemptfrom t
ax.

PERQUI
SITES

Thet erm‘perquisi
te’meansanybenefit
, att
achedtoanof fi
ceorposi t
ion
i
naddi t
iont osalaryorwages.Per qui
sit
edenotesaper sonaladvantage.I
tmay
begiveni ncashori nkind.Ifitisgi
veninkinditshouldbecapabl eofbeing
measur edint ermsofmoney .Forincometaxpur poseswel imitthescopeof
perqui
sitestot hebenefitsreceiv
edinkindandwhi char econvert
ibleinter
ms
ofmoney .Perquisi
tesreceivedincashareter medasal lowancesf ori
ncome
taxpurposes.

1.Per
qui
sit
esTaxabl
eincaseofal
lempl
oyees:

Thef
oll
owi
ngper
qui
sit
esar
etaxabl
eincaseofal
lempl
oyees:

1)Thev
alueofr
esi
dent
ialaccommodat
ionpr
ovi
dedt
otheassesseebyhi
s
empl
oyer

13
2)Anysum pai
dbytheemploy
erinrespectofanyobli
gati
onwhi ch,butf
or
suchpay
ment,woul
dhavebeenpayablebytheassessee.Forexample-

a)Paymentbytheemploy
eroftheemploy
ee’scl
uborhot elbi
ll
s
prov
idedt
hatt
hey
tar
enotconnect
edwi
ththeempl
oyer
’sbusi
ness;

b)Pay
mentbyt
heempl
oyerofanyl
oandueont
hisempl
oyee;

c)Paymentbytheempl
oyerofeducat
ionexpensesoft
hechi
l
drenof
hi
semployees;

d)Pay
mentbyt heempl
oyeroft
hesal
aryofthedomest
icser
vantof
anempl oy
eemeantforhisper
sonaluseandemployedbyt he
employ
ee;

e)Incometaxpai
dbyt
heempl
oyeri
nrespectoft
hesal
aryofhi
s
employ
ee;

f
)Legalexpensesi
ncur
redbyt
heempl
oyert
osav
eordef
endt
he
empl
oyee;

3)Anysum payablebyt heempl oyer

,whetherdirect
lyort hroughaf und,
othert
hanar ecognizedprovidentfundoranappr ov edsuper annuati
on
fundoraDeposit
-l
inkedInsuranceFund, t
oeffectaninsuranceont helif
e
oftheempl
oyeeori nrespectofacont r
actforanannui t
y.

4)Thev al
ueofanyspeci fi
edsecur
it
yorsweatequi t
ysharesal
lot
tedor
tr
ansfer
reddir
ectl
yorindir
ectl
ybytheemployerorf
ormerempl
oyerfr
ee
ofcostoratconcessi
onalrat
etot
heassessee.

5)Theamountofanycont ri
buti
ontoanappr ovedsuperannuati
onf
undby
theemployerinrespectoftheassessee,
totheextentexceedi
ngRs.one
l
akhfif
tythousand.

6)Thev
alueofanyot
herf
ri
ngebenef
itorameni
tyasmaybepr
escr
ibed.

I
nt er
msofpr ov
isionsofSec.17(2)(v
iii
),theval
ueofthefol
lowi
ng
benef
it
sorameni
tiesshal
lbei
ncl
udedintheincomeofanempl
oyee:
14
 1.I
nter
estf
reeorconcessi
onal
loan;

2.Hol
i
dayenj
oyment
;

3.Fr
eef
ood;

4.Gi
ft
;

5.Expenseschar
gedt
oacr
edi
tcar
d;

6.Cl
ubexpenses;

7.Useofmov
abl
easset
;

8.Tr
ansf
erofmov
abl
easset
;

9.Anyot
herbenef
itorameni
ty

2.Per
qui
sit
esTaxabl
eint
hecaseofspeci
fi
edempl
oyeesonl
y

Speci
fi
edEmploy
ees:Theempl oy
eeswhoful
fi
lanyoft
hef
oll
owi
ngt
hree
condi
ti
onsar
ecal
ledspeci
fi
edemploy
ees:

a) ADi rect
or–employ
ee:Anempl oyee,whoisalsoadir
ectori
nthe
empl
oy er-
companywhet
herful
l-
ti
meorpar t
-t
imeandwhet herconti
nui
ng
asdi
rectorfort
hewhol
eorpartoftheear
,isaspecif
iedemployee.

b) Employeehavingsubst anti
alinter
esti
nt heempl oyer-
company:
An employee is sai
dt o have subst ant
iali
nterestint he employer
-
companyifhei sthebenefi
cialownerofequi t
yshar escarryi
ngnotless
than20%ofv oti
ngpower.Hei salsotermedasaspeci fi
edempl oy
ee.

c) Anyotherempl oy
ee(i
.e.notcoveredbytheabov etwocondit
ions)
whoseincomechar geabl
eundert heheadSalar
ies,
includingal
lmonetary
paymentsfrom oneormor eempl oyers,butexcl
udingt hevalueofall
benef
it
s orameni t
iesgiven i
n kind,exceedsRs.50, 000 i
scall
ed a
speci
fi
edempl oyee.

The f
oll
owi
ng ar
ethe t
axabl
e per
qui
sit
es i
n hands of speci
fi
ed

15
 empl
oyees:

1) Faci
l
ityofCar
;

2) Sweeper
,Wat
chman,
Gar
denerandPer
sonal
att
endant
;

3) Gas,
elect
ri
cener
gyandwat
er;

4) Educat
ionf
aci
l
ityt
othemember
sofempl
oyee’
shousehol
d;

5) Tr
anspor
tfaci
l
ity
.

3.Tax-
freePer
qui
sit
es

Theval
ueoft hefol
lowi
ngper
qui
sit
esshal
lnotbei
ncl
udedi
nthesal
ary
i
ncomeofanemploy
ee:

1. Medi
cal
benef
it
s

2. Teaorsnackspr
ovi
dedf
reei
nof
fi
ceorf
act
ory(
wor
kpl
ace)

3. Resi
dent
ial
accommodat
ionpr
ovi
dedatsi
te

4. Expensesont
elephonesi
ncl
udi
ngmobi
l
ephone

5. Empl
oyer
’scont
ri
but
iont
oSt
affGr
oupI
nsur
anceScheme

6. Schol
arshi
pst
oempl
oyeesort
hei
rchi
l
drenpai
dbyt
heempl
oyer

7. The f
acil
i
ty ofconv
eyance pr
ovi
ded by t
he empl
oyerf
rom
resi
dencetopl
aceofempl
oymentandvi
ce-
ver
sa

8. Ref
reshercourses,
etc.I
ftheempl
oyerpaysf eesforanemploy
ee
takingrefr
eshercoursesormanagementcour seinor dertoenabl
e,t
he
empl oyeetoper f
orm hisservi
cesmoreeffi
cient
ly.Suchexpensesare
treatedasscholar
ship

16
 9. Taxpai
dbyt
heempl
oyeront
hev
alueofper
qui
sit
es

10. Perquisi
tes to Government employees posted abr
oad:Any
perquisit
eal l
owedout si
deIndiabytheGov er
nmentofI ndi
atoaciti
zen
ofI ndiaf orendur i
ng ser
vice out
side I
ndia.This exempti
on i
s not
avail
ablet onon- gov
ernmentemployeesandal sotothosewhoarenot
ci
tizensofI ndia

11. Rent
-f
reehouseandconv
eyancef
aci
l
itypr
ovi
dedt
oHi
ghCour
t
Judges

12. Rent-f
reehouseandconv
eyancef
aci
l
itypr
ovi
dedt
oSupr
eme
Cour
tJudges

13. Thevalueofrent
-f
reefur
nishedr
esi
dencepr
ovi
dedtoaMi ni
ster
,
specif
ied of
fi
cers ofParli
amentora Leaderoft he Opposi
ti
on in
Parl
iament

14. Lapt
opsandcomputersprov
idedbytheempl
oyerf
orper
sonal
useofempl
oyeeoranymemberofhi
shousehol
d

15. Inter
est
-free orconcessi
onalloan,i
fthe amountofloan i
n
aggr
egatedoesnotexceedRs.20,
000duringt
he‘
Previ
ousyear
”.

16. Transferwit
houtconsider
ati
on t
o an empl
oyeeofa mov
able
asset
(otherthancomputers,el
ectr
oni
citemsandcar)byt
heempl
oyer
aft
erusingitforaperi
odoftenyear
sormor e

17. Per
iodi
cal
sandj
our
nal
srequi
redf
ordi
schar
geofwor
k

18. Leav
etr
avel
concessi
onu/
s10(
5).

MEDI
CALBENEFI
TS

1.Medi
calTr
eat
mentwi
thi
nIndi
a;

17
a) Thev
alueofanymedicalt
reat
mentprovi
dedf r
eet
oanemployee
oranymemberofhi
sfamil
yinanyhospit
almaint
ainedbyt
heempl
oyer
;

b) Anysum paidbytheemploy
erinrespectofanyexpendi
tur
e
i
ncur
redbytheemployeeonmedi
calt
reat
mentofhimsel
fandmembers
ofhi
sfamil
y

(i
)in a hospit
almaint
ained bygov
ernmentoranyl ocalauthor
it
yor
appr
ovedbyt hegov
ernmentformedi
calt
reat
mentofi
tsemployees;

(i
i)i
nr espectoftheprescr
ibeddiseasesorai
l
ment
sinanyhospi
tal
appr
ovedbyt heChi
efCommissioner
.

c) Pr
emium paidbyt heemploy
eront hehealt
hinsuranceoft he
empl
oyee(includi
ngmembersofhisfami
ly)
,underanapprovedscheme,
orgr
oupmedi cali
nsur
ancebytheemploy
erforhisemploy
ees( i
ncl
uding
membersoftheirf
amil
ies)
;

d) Rei
mbursementbyt heemployerofanypremium pai
dbythe
empl
oyeeonhi shealthinsur
anceoront heheal
thinsur
anceofany
memberofhisf
amilyunderanappr
ovedscheme;

e) LimitedExempt
ion: Ifthemedicaltr
eatmentoftheemployeeor
anymemberofhi sfamil
yisdoneatanypr i
vatehospi
tal
,nursi
nghomeor
cl
ini
cotherthanthosestatedi
nclauses(a)and(b)abovetheexemption
wil
lberestr
ictedt
oRs.15,000.Noexempt i
onw.e.f
.theAssessmentYear
2019-
20.

2.Medi
calTr
eat
mentout
sideI
ndi
a:

a) I
ftheemployeri
ncur
sanyexpendi
tureonthemedicalt
reat
ment
oft
heempl oy
eeoranymemberofhisfamilyout
sideI
ndi
a,totheextent
per
mit
tedbytheRBI;
and

b) I
ftheempl
oyeri
ncur
sanyexpendi
tur
eont
rav
elandst
ayabr
oad

18
 ofthepati
ent(employeeoranymemberofhi sfamil
y)andoneat tendant
whoaccompani esthepati
enti
nconnect i
onwi t
hsuchtreat
ment ,i
twillbe
exemptsubjectt otheconditi
onsthat( i
)t heexpendit
ureonmedi cal
tr
eatmentandst ayabroadwil
lbeexemptt otheext
entper mi
ttedbyt he
RBIand( i
i
)theexpendi t
ureontrav
elshal lbeexemptint hecaseofan
employeewhosegr osstot
ali
ncome( excl
udingthi
sexpenditur
e)doesnot
exceedRs.2lakh.

VALUATI
ONOFPERQUI SITES
Tax-
freeperquisi
tesarenott
obev al
uedatal
l.Thoseperqui
sit
es
whi
chareei
thert
axabl
einal lcasesori
nspeci
fi
edcasesar
et obeval
ued.

1. VALUATI
ONOFRESI
DENTI
ALACCOMMODATI
ON

Fort he pur
pose ofdet
ermining t
he value ofr
esi
dent
ialaccommodat
ion
provi
ded by the empl
oyer
,t he employees hav
e been di
vi
ded i
ntotwo
categor
ies:

(
1)Gov
ernmentEmpl
oyees:

Theseincl
udetheemployeesholdi
ngoff
iceorposti
nconnecti
onwi
tht
he
aff
air
sofuni onorSt at
eorser vi
ngwi t
hany bodyorunder
taki
ngundert
he
contr
olofsuchGovernmentondeputati
on.

Valuation:Thev alueoft her ent-freeunfur ni

shedhousewi l
lbet akent obet he
l
icencef eedet er
mi nedbyt heGov er
nmenti naccordancewi t
ht herulesf r
amed
byGov ernmentforal l
otmentofr esidences.I ft
heaccommodat i
oni sfurni
shed,
thev alueoft heper qui
sitewi l
lfirstbecomput edont heabov ebasi sandt hen
i
ncr easedbyanamountequalt o10% perannum oft heor igi
nalcostoft he
furnit
ure( i
ncludingr efr
igerators,t elev
isionset s,radiosets,ai r
-conditi
oning
plantorequi pment sotherhousehol dappl i
ances)prov i
ded.Ifsuchf urnit
ureis
hirebyt heempl oyerthehi r
echar gespay ableforthefurnit
urewi l
lbet akeninto
account .

19
From t
heaboveval
ue,i
fanyamountispai
dorpay
ablebyt
heempl
oyeedur
ing
thepreviousy
earshal
lber educedandthebal
anceshal
lbetheval
ueof
perqui
sit
e.

Comput
ati
on ofv
alue ofResi
dent
ialAccommodat
ion i
n case ofGov
t.
Empl
oyees

Amountdet
ermi
nedasperGov
ernmentRul
es xxxxx
Add:
10%p.
a.ofcostoff
urni
tur
eorHi
rechar
ges,
ifany
xxxxx

_
___
___
_
xxxxx

Less:
Amountpai
dorpay
abl
ebyt
heempl
oyee(
ifany
) xxxxx

_
___
___
_

Val
ueofAccommodat
ion xxxxxx

(
2)Ot
herEmpl
oyees:

(
a)Accommodat
ionownedbyempl
oyer
:

(i
) 15% ofsal
aryi
nci
ti
eshav
ingpopul
ati
onexceedi
ng25l
akhasper2001
census,

(i
i) 10% ofsal
aryi
n ci
ti
eshav
ing popul
ati
on exceedi
ng 10 l
akh butnot
exceedi
ng25l
akhasper

20
 2001census,

(
ii
i)7.
5%ofsal
aryi
nanyot
herpl
aces,

i
nrespectoft
heperi
odduri
ngwhi
cht
heaccommodat
ionwasoccupi
edbyt
he
employ
eeduri
ngtheP.Y.

(
b)Accommodat
ioni
stakenonl
easeoronr
entbyt
heempl
oyer
:

Actualamountofl
easerent
alpaidorpay
ablebyt
heemploy
eror15%of
sal
ary,
whi chev
eri
slower
,wil
lbetheval
ueofaccommodat
ion.

Wheretheaccommodati
onisfurni
shed10%p. a.ofthecostoff
urni
ture
shal
lbeaddedtotheaboveval
ue.Ift
hef ur
nit
urei
shi r
edbytheemployerthe
hi
rechar
gespayablef
orthef
urni
tur
ewi l
lbetakeni
ntoaccount
.

Fr
om theabov eval
ue,ifanyamountispai
dorpayabl
ebytheemployee
dur
ingtheP.Y.shal
lbereducedandthebal
anceshal
lbet
heval
ueofper
quisi
te.

(
c)Accommodat
ionpr
ovi
dedi
naHot
el:

Wher
etheaccommodat
ionisprov
idedbytheemployer(
Governmentor
non-
Gover
nment
)totheempl
oyeeinahotel
,i
tsv
alueshal
lbeasunder:

(
i)Wher
etheaccommodati
oni
sprovi
dedonhi
stransferf
rom oneplaceto
anot
herandtheperi
odi
naggr
egat
edoesnotexceed15day s-t
hev al
ue
shal
lbet
akenasnil
.

(
ii
)Inanyothercase,t
hev
alueshal
lbet
aken24%ofsal
arypai
dorpay
abl
efor
t
heprev
iousy ear

(fortheper
ioddur
ingwhi
chsuchaccommodati
onisprovi
ded)ort
heact
ual
chargespai
dorpayabl
etosuchhot
el,
whi
cheveri
sless.

Fr
om theaboveval
ue,ifanyamounti
spai
dorpayabl
ebytheempl
oyeeshal
l
bereducedandt
hebalanceshal
lbet
heval
ueofper
qui
sit
e.

21
(
d)Accommodat
ionpr
ovi
dedatsi
te:

Wheretheaccommodat i
oni sprovi
dedt o anemployeeworki
ng ata
mini
ngsiteoranonshoreoilexpl
orat
ionsi
teorapr oj
ectexecut
ionsi
teora
dam si
teorapowergener
ati
onsiteoranoff-
shoresi
tewhi
ch:

(
i)beingoft emporarynat
ureandhavingpl
i
nthar
eanotexceedi
ng800square
f
eet,isl ocated notless t
han 8 k.
m.awayf r
om the l
ocallimi
ts ofany
municipal
it
yorcant onmentboar
d;or

(
ii
)islocat
edi
nar
emot
ear
ea,t
hev
alueofsuchaccommodat
ionshal
lbe
t
akenasnil
.

(
e)Accommodat
ionatt
het
imeoft
ransf
er:

Whereonaccountoftransferofanempl oyeefrom onepl

acetoanot
her
,
hei sprovidedwit
haccommodat i
onatt henew pl aceofposti
ngwhilehe
retai
nstheaccommodationatt heot herplace,t
hev alueofper
qui
sit
eshal
lbe
takenforoneaccommodationwhi chhasl owervalue.

2.VALUATI
ONOFMOTORCAR

(
1)Carownedorhir
edbyt
heempl oyer
.Cari
susedwhol
lyandexcl
usi
vel
yin
t
heperf
ormanceofhi
s of
fi
cialduti
es.

Val
ueshal
lbet
akenasni
lpr
ovi
dedt
hepr
escr
ibedcondi
ti
onsar
esat
isf
ied.

22
(2)Carowned byempl oy
erand i
tisused excl
usi
vel
yfortheprivat
eor
personalpur
posesoft
he employ
eeoranymemberofhishousehol
d:

Actualamountofexpendit
ureincur
redont herunni
ngandmai
ntenanceof
mot or car xxxxx
Add: (
i)Remuner
ati
on,
ifany,pai
dtothechauff
eur(dr
iver
)
xxxxx

(i
i
)Depr
eci
ati
on@ 10%p.
a.oft
heact
ual
costoft
hemot
orcar
xxxxx

xxxxx

Less:
Amountchar
gedf
rom t
heempl
oyeei
fany
xxxxx

Val
ueofper
qui
sit
e
xxxxxx

(3)Caristakenonleaseandi
tisusedexcl
usi
vel
yforthepr
ivat
eorper
sonal
purposesofemploy
eeor anymemberofhi shousehol
d:

Amountspentonr
unni
ngandmai
ntai
ningt
hecar xxxx

Add:Remuner
ati
on,
ifany
,pai
dtot
hechauf
feur(
dri
ver
) x
xxx

xxxxxx

Less:
Amountchar
gedf
rom t
heempl
oyee xxxx

Val
ueofper
qui
sit
e xxxxxx

(4)Carownedorhir
edbyemploy
er.Carisusedpart
lyint
heperf
ormanceof
duti
esandpart
lyf
or pri
vat
e orpersonalpurposes ofemployee orany
memberofhishousehol
d:

23
(a)Ift
heent
ir
eexpensesofmai
ntenanceandr
unni
ngoft
hemot
orcarar
e
bornebyt
heempl
oyer:

(
i)Smal
lcar(
Cubi
ccapaci
tyofengi
neoft
hecardoesnotexceed1.
6li
tr
e)
Rs.1,
800p.
m.

(i
i)Largecar(
Cubi
ccapaci
tyofengi
neoft
hecarexceeds1.
6li
tr
e)
Rs.
2,400p.m.

I
fchauf
feuri
sal
sopr
ovi
ded,
addRs.900p.
m.

(b)Iftheexpensesofmai
ntenanceandrunningf
orhispr
ivat
eorper
sonal
purposearemetbythe assessee(i
.e.
,theempl
oyee)
:

(
i)Smal
lcarRs.600p.
m.

(
ii
)Lar
gecarRs.
900

I
fchauf
feuri
sal
sopr
ovi
ded,
addRs.
900p.
m.

(
5)Empl
oyeeusesmor
ethanonecarf
orpr
ivat
epur
poses:

Wheremoret hanonemotorcari
sownedorhir
ebyt heemploy
erandthe
employeeoranymemberofhi shousehol
disall
owedt heuseofsuchmotor
car
s( ot
her
wisethanwhol l
yandexcl
usi
vel
yintheperf
ormanceofduti
es)
,the
val
ueofperqui
sit
eshallbe:

a)I
nrespectofonecar
:

(i
)SmallcarRs.1,800p.m.(ii)LargecarRs.2, 400p.m.
I
fchauff
eurisalsoprovided, addRs.900p.m.
b)Inr
espectofot hercar/cars:
Assumingt hecar/carsi susedexcl usi
velyforpri
vat
epurposesandthe
val
ueshal lbedet er
minedasdi scussedi n2i fthecarisownedbyt he
employerorasdiscussedin3i fthecari stakenonleasebyt
heempl oyer
.

24
(
6)Carownedbyt
heempl
oyee;

(a)The act ualrunning and maint

enance char
ges (i
ncludi
ng chauff
eur
’s
remuner at
ion)aremetorreimbursed by t he empl oyer and such
rei
mbur sementi sf
ortheuseofthecarwhollyandexcl
usi
velyforof
fi
cial
purposes-Val ueshallbetakenasnilprovi
dedtheprescri
bedcondit
ionsare
sati
sfi
ed.

(b)Wher erei
mbur
sementofexpenses oft
he cari
s wholl
yforper
sonal
purposesoftheemployeeoranymemberofhi
shousehol
d-Val
ueshal
lbe
takenequal
toamountreimbur
sed.

(c)Wher ereimbursementofexpenses ofthe caris par

tl
yforof
fi
cial
purposesandpart
lyofpersonalpur
posesoft
heemploy
eeoranymemberof
hishousehol
d:

(i
)Smallcar
-Theval
ueofperqui
sit
eshallbetheactualamountofex
pendit
ure
i
ncurr
edbyt heemploy
erlessRs.1,800p.m.+Rs.900p. m.forchauf
feur,i
f
any,
provi
dedthepr
escri
bedcondi
ti
onsaresatisf
ied.

(i
i)Large car– The v al
ue ofperquisi
te shallbe t
he actualamountof
expendi
tur
ei ncurr
ed byemployerlessRs/.2, 400 p.
m.+ Rs. 900 p.
m.f
or
chauff
eur,
ifany,prov
idedt
heprescr
ibedconditi
onsaresat
isf
ied.

Prescri
bedConditi
ons:Wher eitisclaimedt hatvehicl
eisusedwhol lyand
exclusi
vel
yintheper for
manceofof fi
cialdutyort heactualexpenseson
runningandmaintenanceofthev ehi
cle,ownedbyt heempl oyee,foroff
ici
al
purposesaremoret hanprescri
bedamount( CarRs.1,
800/
Rs.2,4000p.m.as
thecasemaybeandot herautomoti
veRs. 900p.m.)
,thefol
lowingdocument s
shouldbemaint
ained:

25
 (a)Complet
edetai
l
sofj
ourneyunder
takenforoffi
cialpur
posewhi
chmay
i
ncludedateof j
our
ney,desti
nati
on,mileageandt heamountof
expendit
urei
ncur
red.

(b)Acert
if
icat
eoft
heempl
oyertotheeff
ectthatt
heexpendi
tur
ewas
i
ncurredwhol
l
yand excl
usi
velyf
ort heperf
ormanceofoffi
cial
dut
ies.

3.SWEEPER,
GARDNER,
WATCHMANORPERSONALATTENDANT

Wher etheempl oy
erprovi
destohisempl oyeeorhishousehol
dservices
ofasweeper ,aGar
dner,awatchmanoraper sonalat
tendant,t
heval
ueoft he
perqui
sit
eshal lbethetot
alamountofsalar
ypai dorpayablebytheemployer
oranyot herpersononhisbehalf,l
esstheamountpai dbyt heemploy
eef or
suchservices.

4.GAS,
ELECTRI
CENERGYORWATER

(i
)Wher etheempl oy
erprovidesgas,elect
ri
cenergyorwat erforhousehol
d
consumptionoftheemployee,theval
ueofthebenef
itshal
lbetheamountpaid
ont hataccountbyt heempl oyertotheagencysupplyi
ngt hegas,elect
ri
c
energyorwater.

(i
i)Wher e such suppl
yis made from r esour
ces owned byt he employer
(wit
houtpur chasi
ng them fr
om any ot herout si
de agency
),the val
ue of
perqui
sit
eshallbethemanufactur
ingcostperunitincur
redbytheemployer.

Howev
er,inbotht
hecases,i
fempl
oyeeispayi
nganyamounti
nr espect
ofsuchserv
ices,t
heamountsopaidshallbededuct
edfrom t
heaforesaid
val
ue.

26
5.EDUCATI
ONFACI
LITY

(A)Wher eaneducationali
nsti
tut
ionisit
sel
fownedandmai nt
ainedbythe
employerorwher ef ree educat
ionalf
acil
i
ties ar
e all
owed i
n any ot
her
educat
ionali
nsti
tut
ionbyreasonofhisbei
nginempl oy
mentofthatempl
oyer
,
theval
ueshallbe:

(
a)Educat
ionf
aci
li
typr
ovi
dedt
ochi
ldr
enoft
heempl
oyee:

(i
)ifthecostofsucheducat
ionort
hev
alueofsuchbenef
itperchi
l
ddoesnot
exceedsRs.1,
000p.m.-
Nil

(
ii
)ifcostorval
ueexceedsRs.1,
000p.
m.–Costofsucheducat
ioni
nasimil
ar
i
nsti
tut
ioninorneart
helocal
i
tylesst
heamountr
ecover
edfrom t
heempl
oyee.

(
b)Educat
ionf
aci
li
typr
ovi
dedi
nanyot
hereducat
ionali
nst
it
uti
on:

Costofeducat
ioninsi
milari
nst
it
uti
oni
norneart
hel
ocal
i
tyl
esst
heamount
recov
eredf
rom theempl
oyee

(B)Educati
onf aci
l
ityprovi
dedinanyot hereducat
ionalinst
it
uti
on:Educat
ion
faci
l
ityprov
idedtothechil
drenoftheemployeeorotherhousehol
dmember s–
Thev al
ueshall
bet heexpendi
tur
eincur
redbyt heemployer.

6.TRASNSPORTFACI
LITI
ES

Whereanundertaki
ngisengagedinthecarr
iageofpassengersorgoods
anditpr
ovidestoanyemployeeortoanymemberofhi shouseholdforpriv
ate
j
ourneyfr
eeofcostoratconcessionalf
are,i
nanyconv eyanceowned,leased
ormadeav ai
labl
ebyanyotherar
rangementbytheundertaki
ngforthepurpose

27
oftr
ansportofpassenger
sorgoods–Theval
ueoft
hebenef
itoramenityshal
l
bethevalueatwhichsuchbenefi
torameni
tyi
soff
eredbyt
heundertakingto
thepubl
ic.

I
fanyamountispaidorr
ecov
eredfr
om t
heemploy
eef
orsuchbenef
itor
ameni
ty,i
tshal
lbededuct
edfr
om t
heafor
esai
dval
ue.

Note:Incaseofanempl oyeeofanAi
rl
ineort
heRai
l
way
s,t
hev
alueof
t
ransportf
aci
l
ityshal
lbeexempt.

7.I
NTERESTONFREELOAN

I
nter
estonloangi
ventoemployeebyt
heempl
oyeri
sexempt
edi
fthe
l
oanamountisl
essthanRs.
20,
000

Ift
heloanamountismorethanRs.20,000,theprev
aili
ngSBIr ateshav e
tobetakenforcal
cul
ati
ngperqui
sit
es.Iftherateofinterestchargedby
theemployeri
sbelowSBIrat
es,thenthediffer
enceint herateist aken
asperqui
sit
es.

8.FREEFOOD,etc
Theval
ueoff r
eef ood and non-
alcohol
i
cbever
agespr
ovi
ded byt
he
empl
oyert
oanempl oyeeshallbeasunder
:
a)Teaandsnacksprovidedduri
ngworkinghour
s–nil
.

b)Freef
oodandno-al
coholi
cbever
agesprov
ideddur
ingwor
kinghour
sina
remot
eareaoranoff
-shor
einst
all
ati
on–nil

c)Freefoodandnon- alcoholi
cbev eragespr ovi
deddur i
ngwor kinghoursat
theofficeorbusi
nesspr emisesort hroughpaidv oucher swhicharenot
transf
erabl
eandusabl eateat ingjoints,thev aluether eofshallbethe
amountofexpendi tureincur r
edbyt heempl oy eeasr educedbyi )the
amountpai dorr
ecov eredfrom theempl oyee,andi i
)Rs.50permeal .

9.GI
FT
28
 Thevalueofanygi ftorvoucherort okeni nli
euofwhi chsuchgi ftmaybe
recei
vedbyt heempl oyeeorbyamemberofhi shousehol doncer emoni al
occasionsorot herwiseshallbesum equal tot heamountofsuchgi ft
.
Wheret he gift
s are giv
en tot he empl oyees on socialand r eli
gious
occasionsli
keDi wal
i,Chri
stmas,Newy ear ,theanni ver
saryoft heorganization,
et.
,suchgiftsupt oRs.5, 000intheaggr egat eduringthepr evi
ousy earwoul d
beexempt ,bey ondwhi chitwouldbetaxedasper quisit
e.
Howev er,gift
smadei ncashorconv ertiblei
ntocash, l
ikegiftchequeet c.
,
shall
notbeexempt .

PROFI
TINLI
EUOFSALARY

Pr
ofi
tinl
i
euofsal
aryi
ncl
udest
hef
oll
owi
ng:

1)Theamountofanycompensat
ionduetoorrecei
vedbyanassesseef r
om
hisemploy
erorf
ormeremploy
erinconnect
ionwit
htheterminat
ionofhis
employmentort
hemodifi
cati
onofthet er
msandcondi t
ionsrelat
ingto
ther
eto.

2)Anypay mentduetoorrecei
vedbyanassesseefr
om anempl oyerora
formeremployer
.Whereanemployergi
vestohi
semployeeanysum by
wayofper sonalgif
tandnotinappreci
ati
onofhisservi
ces,itisnot
taxabl
einthehandsoft
heemploy
ee.

3)Anypaymentmadef rom unr ecogni

zedprovi
dentfundorot herfundwi l
l
beincl
udedonlytotheext entofemployer’
scontributi
onsandi nt
erest
ther
eon.I
nter
estonemploy ee’sowncontr
ibuti
onisal sotaxablebutitwil
l
betaxedunderthehead‘Incomef r
om Ot
herSour ces’andnotassal ary
i
ncome.

4)Anypaymentrecei
vedunderaKeymanI
nsur
ancePol
i
cyi
ncl
udi
ngt
he
amountofbonus.

29
 5)Anyamountdueorr ecei
ved(
whet
heri
nlump-
sum orot
her
wise)byan
assesseef
rom anyperson.

 Bef
orej
oini
nganyempl
oymentwi
tht
hatper
son;
or

 Af
tercessat
ionofhi
sempl
oymentwi
tht
hatper
son.

Deduct
ions

Theincomechargeabl
eunderthehead‘
Sal
ari
es’shal
lbecomput
edaf
ter
maki
ngt hef
oll
owi
ngdeduct
ions:

1)St
andar
dDeduct
ionupt
oRs.40000[
Sec.16(
ia)

2)Ent
ert
ainmentAl
l
owance[
Sect
ion16(
ii
)]

3)Empl
oymentTax[
Sect
ion16(
ii
i)
]

1)Entert
ainmentAll
owance:Amountgr antedasenter
tai
nmentall
owanceto
anempl oyeebyhisemploy
erisincl
uded undert
hehead‘Sal
ari
es’andt
hen
thefol
lowingdeduct
ioni
sallowedinthi
sconnect
ion:

a)I
nthecaseofaGov
ernmentempl
oyee:

1.Amountr
ecei
ved;

2.1/
5ofbasi
csal
ary
;

3.Rs.5,
000whi
chev
eri
sless

b)I
nthecaseofanyot
herempl
oyee:
Nil

30
 Note:Any entert
ainmentex penses i
ncur
red by t
he employ
ee
(whethergover
nmentempl oyeeornon-gover
nmentemploy
ee)i s
nottakeni
ntoconsi
derat
ionatall
.

2)TaxonEmpl
oy ment
:Anysum paidbytheassesseeonaccountofataxon
empl
oyment
,levi
abl
ebyorunderanyl
aw, i
sall
owableasdeduct
ion.

Not
es:(
1)Ift
heamountofemploymentt
axhasbeenpai
dbytheemploy
er,i
t
wil
lbeaddedi
nsal
aryi
ncomeandthent
hededuct
ionwi
l
lbeal
l
owed.

31