Tds on allowances

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2012 The employee of particular company is required to pay outstation visit on official tour. As per policy, The Company pays him outstation allowance and transit allowance at flat rate without submission of bill or actual rates on submission of bills. This are to meet his daily laundry, expenses.
For allowance paid at flat rates without bill, the company pays it to the employee, after deducting higher TDS rates (30%).Just wanted to know whether this is practice, since u/s 10(14) any allowance paid to employee to meet his expenses of official duties on outstation travel, to the extent utlised, are not taxable.
Kindly guide.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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13 February 2012 What ever you are mentioned in nature or per diem allowance. also the allowance to meet the official requirement is not taxable. giving allowance to a person for meeting expenses during official travel is exempted subject to actual expenses

deducting 30% on flat is not good practice, instead of this it can be insisted to provide the actual bills and balance will be taxable accordingly as per sec.10(14)

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2012 Thank you sir.
These are flat allowances that can be claimed by an employee, whether and to what extent employee spends it or not.

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