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  • 7/29/2019 tax exemptions


    No. Salary Structure

    1 Basic Salary

    2 DA

    4 Computer Allowance

    5 Conveyance (Transport)


    6 Foreign Allowance

    7 Helper Allowance

    8 Children Education Allownce

    9 Children Hostel

    Allowance(Amount granted tomeet hostel expenditure on

    employee's children)

    10 Electricity Expense Allowance

    11 Conveyance Allowance

    (Reimbursement-Fixed Amount

    over & above the amount referred

    at S.No. 5)

    12 Outstation Allowance

    13 Entertainment Expense Allowance

    14 Clothing/Uniform Allowance

    15 Bonus/Ex Gratia

    3 HRA

    16 Reimbursement of car expenses

    in case of cars owned by the


  • 7/29/2019 tax exemptions



    Reimbursement of fuel bills in

    case of car owned by theemployee.

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    18 Reimbursement of scooter

    expenses in case of scooter

    owned by the employer.

    19 Reimbursement of scooter

    expenses in case of scooter

    owned by the employee.

    20 Leave Travel Allowance

    21 Leave Encashment

  • 7/29/2019 tax exemptions


    23 Provident Fund

    22 Canteen Expense on monthly

    fixed basis.

    24 Gratuity

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    25 Telephone Expenses/(Actuals)

    27 Medical Reimbursement

    Rent free Furnished


    Where accommodation is owned

    by employer.

    Where accommodation is taken

    on lease or rent by the employer.

    26 Medical Facilities


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    Where accommodation is

    provided by the employer in the

    hotel (except where aggregate

    period of stay does not exceed 15

    days on his transfer from one

    place to another).

    31 Personal / Group Accident

    Insurance Policy

    29 Sweeper, gardener, watchman,

    personal attendant

    30 Interest free advances/ loans to

    employee or anymember of his

    household by the employer or

    anyperson on his behalf.

    32 Gift or voucher or token

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    Movable Asset :

    33 Gas, Electric Energy and


    34 Free or concessional fare.


    Travelling, Touring,

    accommodation and other



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    Where any movable asset (other

    than motor cars or laptops or

    computers) belonging to employer

    or hired by himfor the use of

    employees or any member of


    Where any movable asset

    belonging to employer are

    transferred to employee directly or

    indirectlyor any member of his


    In case of computers and

    electronic items.

    In case of motor cars.

    37 Free education facility to



    Free or concessional educational

    facilties for any member of

    employee's household.


    Credit Card

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    41 Stock Options

    42 Any other benefit

    Tax on Remuneration paid to

    Technician (not

    resident in any of four financial

    years preceding

    the year when he arrived in India)

    Passage money or free or

    concessional passage



    Expenditure in Club

    43 Tax on Perquisites Borne by



  • 7/29/2019 tax exemptions


    on home leave or proceeding to

    home country

    after retirement to foreign

    employees, not being

    citizens of India.

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    Max exemption is restricted to least of the following three amounts:

    1. 50% of salary (40% in case of cities other than metros

    2. Excess of rent paid over 10% of salary

    3. Actual amount of HRA received.

    Exempt under S.10(14)/ Rule 2BB upto Rs. 800/- p.m. Exempt if

    allowance is granted to meet his expenditure forthe purpose of

    commuting between the place of hisresidence and the place of duty.

    Exempt to the extent incurred on helper where such helper is engaged

    for performance of official duties.

    Exempt upto Rs. 100 p.m. per child for a maximum of 2 children.

    Exempt upto Rs. 300 p.m. per child for a maximum of 2 children.

    Exempt to the extent conveyance allowance is utilised for meeting

    expenditure on conveyance for performing official duties.

    Exempt where allowance is given to meet the expenditure on the

    purchase or maintenance of uniform for wear during the performanceof official duties.

    Expenses are met or reimbursed by the employer,

    If car is used so far for official purposes,

    No amount is taxable provided documents as specified in

    Note A are maintained by the employer.

    Note A: The following conditions should be fulfilled:

    1. the employer has maintained complete details of journey

    undertaken for official purpose which may include date of journey,

    destination, mileage and the amount of expenditureincurred thereon;

    2. the employer gives a certificate to the effect that the expenditure

    was incurred wholly and exclusively for the performanceof official


  • 7/29/2019 tax exemptions


    Earlier Rules: Where car is used for official purposes , not a perquisite

    and hence not taxable.

    Where maintenance & running expenses are met by employer

    if car is used wholly for official purposes, nil

  • 7/29/2019 tax exemptions


    provided the documents as specified in Note A above are maintained

    by employer.

    Earlier Rules:Where car is used for official purpose only , and

    expenses are met by the employer, this will not amount to perquisite.

    New rules for valuation of perquisites do not specify the treatment

    under this case, hence old rules can be taken as the base for valuing

    this perquisite.

    Earlier Rules: If reimbursed for official use only , then not taxable.

    Where expenses are met or reimbursed by employerfor the use for

    official purposes, no value is taxable provided documents specified in

    Note A above are maintained by the employer.

    Earlier Rules:

    Where expenses are reimbursed for the official use only , not taxable.

    Exempt from tax under S.10(5) maximum upto twice in a block of 4


    (Current block- 1st January 2002- 31st December 2005)Exemption is

    available for actual amount spent on travel to any place in India for

    himself and his family as provided in Rule 2Bof Income Tax Rules.

    If paid on retirement whether on superannuation or otherwise, amount

    is exempt from tax to the extent of least of the following:

  • 7/29/2019 tax exemptions


    a. Cash equivalent of leave salary in respect of period of earned leave

    to the credit of an employee only at the time of retirement whether on

    superannuation or otherwise.

    b. 10 months average salary.

    c. The amount not chargeable to tax as specified by Government

    from time to time (at present Rs. 300,000/-)in case of employees

    retire whether on superannuation or otherwise on or after 1.4.1998

    d. Leave encashment actually received on retirement.

    It shall not be a perquisite in the following cases

    1. Free meals provided by the employer during office hours at office

    or business premises or through paid vouchers which are not

    transferable and are usable only at eating joints,if the value thereof in

    either case is upto Rs.50 per meal.

    2. Tea or snacks provided during office hours.

    3. Free meals during working hours provided in a remote area or an

    offshore installation.

    Earlier Rules:

    Refreshments/subsidised lunch or dinner

    Exempt when provided in the office premises during workinghours. An

    amount upto Rs. 35 per day if provided outside the place of work and

    amount is paid by employer directly to caterer,restaurant etc. is

    exempt.Contribution by an employer to recognised Provident Fund is exempt

    upto 12% of salary.

    For employees covered by the Payment of Gratuity Act:

    Any gratuity received by employee is exempt from tax to the extent ofleast of the following:

    1. 15 days salary for every completed year of service or part thereof in

    excess of 6 months.

    2. Rs. 3,50,000/-

    3. Gratuity actually received.

    In case of other employees:Any other gratuity received by an employee

    on retirement, death, termination, resignation is exempt from tax to the

    extent of least of the following:

    1. Rs. 3,50,000/-

    2. Half month's salary for each completed year of service.

    3. Gratuity actually received.

    Any provision for gratuity in the books of accounts by the company for

    the benefit of employees is not taxable during the tenure of service of

    the employees.

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    Not Taxable

    1. Medical insurance taken by the employer for the employee or any

    member of the employee's familyor any reimbursement to employee

    of insurance premium which he has incurred is exempt.

    2. Reimbursement by employer, of expenses incurred by employee

    on his medical treatment or that of any other member of his family in

    any hospital maintained by Govt. or in a hospital approved by Govt. or

    where payment is made by the employer directly to hospital etc.

    approved by the Chief Commisioner of Income Tax in

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