allowance and their taxability

ADVANCED ACCOUNTING & TAXATION

(INCOME TAX)

Submitted by Guided by

Vijay Somase Prof Kopate mam

ALLOWANCE AND THEIR TAXABILITY

TYPES OF ALLOWANCES

• Fully Taxable Allowance• Fully Exempted Allowance• Partly exempted & Partly

Taxable

FULLY TAXABLE ALLOWANCE

1. Dearness Allowance (D.A)

2. Fix medical allowance

3. Tiffin allowance4. City compensatory

allowance5. Overtime Allowance

6. Entertainment allowance

7. Overtime allowance8. Non-practicing

allowance(For Doctors)

9. Other allowance Project Allowance Family Allowance

Servant Allowance

FULLY EXEMPTED ALLOWANCE

1. Foreign Allowance2. Allowance from UNO pay to it’s employee 3. Allowance to high court judge

PARTLY EXEMPTED AND PARTLY TAXABLE ALLOWANCE

House rent allowance (HRA)The lease of following amount is exempted from tax

a) Actual HRA receivedb) Rent paidc) Less – 10% of Salary {Basic salary + D.A. (if

admissible) + commission(fix percentage) }d) 40% of salary

( in case of Mumbai, Delhi, Chennai, Kolkata- 50% )

IN CASE OF PRIVATE EMPLOYEE

Valuation of unfurnished accommodation

City/ Place ofAccommodation

Where the Accommodation

owned by employer

Accommodation provide on rent

Population is more than 25 lakhs 15% of salary

Rent paid OR

15% of salary Whatever is less

Population between 25-10

lakhs10% of salary

Population less than

10 lakhs7.5% of salary

In hotel -24% of salary

Or Actual charges paid to hotel

Whichever is less

Thank you