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Exemptions & Deductions under the head Salaries
  
Deductions under Chapter VI-A
  
  
  
  
  
  
  

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Note :

List of 30 benefits available to Salaried Persons for AY 20-21

Sl No. Particulars Benefits under Income Tax Act
1. House Rent Allowance Least of the following is exempt:
a) Actual HRA Received
b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)
c) Rent paid minus 10% of salary
* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission
Note:
i. Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent
ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October, 2013].
2. Children Education Allowance Up to Rs. 100 per month per child up to a maximum of 2 children is exempt
3. Hostel Expenditure Allowance Up to Rs. 300 per month per child up to a maximum of 2 children is exempt
4. Transport Allowance granted to an employee to meet expenditure for the purpose of commuting between place of residence and place of duty Rs. 3,200 per month granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with a disability of lower extremities
5. Transport Allowance to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. Amount of exemption shall be lower of following:
a) 70% of such allowance; or
b) Rs. 10,000 per month.
Partly allowed expenditures
6. Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office Exempt to the extent of expenditure incurred by employee
7. Any Allowance granted to meet the cost of travel on tour or on transfer Exempt to the extent of expenditure incurred by employee
8. Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty Exempt to the extent of expenditure incurred by employee
9. Helper/Assistant Allowance Exempt to the extent of expenditure incurred by employee
10. Research Allowance granted for encouraging academic research and other professional pursuits Exempt to the extent of expenditure incurred by employee
11. Uniform Allowance Exempt to the extent of expenditure incurred by employee
Allowances on which no tax needs to be paid
12. Foreign allowances or perquisites paid or allowed by Government to its employees (an Indian citizen) posted outside India Fully Exempt
13. Allowances to Judges of High Court/Supreme Court (Subject to certain conditions) Fully Exempt
14. Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax:
a) Value of rent free official residence
b) Value of conveyance facilities including transport allowance
c) Sumptuary allowance
d) Leave travel concession
Fully Exempt
15. Allowances paid by the UNO to its employees Fully Exempt
Special circumstances
16. Allowances to Retired Chairman/Members of UPSC (Subject to certain conditions) Exempt subject to maximum of Rs.14,000 per month for defraying services of an orderly and for secretarial assistant on contract basis.
The value of residential telephone free of cost and the number of free calls to the extent of 1500 per month shall be exempt.
17. Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations) Amount exempt from tax varies from Rs. 300 per month to Rs. 7,000 per month.
18. Border area allowances, Remote Locality allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations) Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300 per month.
19. Tribal area allowance given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa Rs. 200 per month
20. Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) Rs. 2,600 per month
21. Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) Rs. 3,900 per month
22. Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines Up to Rs. 800 per month
23. High Altitude Allowance is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations) a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet)
b) Up to Rs. 1,600 per month (for altitude above 15,000 feet)
24. Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations) Up to Rs. 4,200 per month
25. Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations) Up to Rs. 3,250 per month
On benefits extended by Employers
26. Employer’s contribution towards superannuation fund 17(2)(vii) Taxable in the hands of employee to the extent such contribution exceed Rs.1,50,000
27. Interest free loan or Loan at concessional rate of interest 17(2)(viii) read with Rule 3(7)(i) Nothing is taxable if Loan in aggregate does not exceed Rs 20,000
28. Free food and beverages provided to the employee 17(2)(viii) read with Rule 3(7) (iii) Food in office premises or through non-transferable paid vouchers usable only at eating joints provided by an employer is not taxable if cost to the employer is Rs. 50(or less) per meal.
29. Credit Card 17(2)(viii) read with Rule 3(7)(v) Expenses incurred for official purposes shall not be a taxable perquisite provided complete details in respect of such expenditure are maintained by the employer
30. Motor Car is owned by the employee: Reimbursement of running expenses is for the use of the vehicle partly for official purposes and partly for personal purposes of the employee or any member of his household. Engine Capacity upto 1600 cc Rs. 1,800 per month
Engine Capacity above 1600 cc Rs. 2,400 per month
(plus Rs.900 per month, if chauffeur is also provided to run the motor car)


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