Applicability of Section10(14)(i) of Income Tax Act

This query is : Resolved

sabir (Querist)
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07 August 2022 Hi,

I am a salaried taxpayer with my residential status for AY 22-23 being ‘Ordinary Resident’. I work for a semi-government organization and was transferred from Mumbai to Hyderabad in August 2021. I received the following allowances from my employer due to the transfer:

1. Lodging Allowance per day (for temporary hotel accommodation for a 2 month period)
2. Halting Allowance per day
3. Journey Fare (Air tickets purchased by me reimbursed by my employer)
4. Local Conveyance
5. Miscellaneous Expenses
6. Allowances for transfer of belongings (including a car)

The above allowances aggregate to about Rs. 5 lakh.

I request your guidance on whether I can claim any exemption under Section 10(14)(i) of the IT Act read with Rule 2 BB of Income Tax Rules for the aforementioned allowances. I have already filed my returns for AY22-23 in July 2022 and same is yet to be verified by the IT authorities. Will file revised returns accordingly.

Would appreciate your valuable guidance. Thank You.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 August 2022 All the above payments exempt from tax.
Why your employer not allowed it in your TDS calculation.
Claim it when any notice comes properly reply to it.

In accordance Rule 2BB of in IT Rules, 1962, any allowance (by whatever name called) granted to meet the cost of travel or tour or on transfer is completely exempted from tax in the employee’s hands.

For the purposes of this clause “allowances granted to meet the cost of travel or transfer” include any sum paid in connection with the transfer, packing and transportation of personal effects on such transfer.

Under this Rule the TA granted to the employees while they travel on tour or on transfer would be completely exempted from tax, Of course, the entire amount on this account should be spent to meet the expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit.

Adv. Ravish Bhatt, ADIT, CIOT

Adv. Ravish Bhatt, ADIT, CIOT (Expert)
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08 August 2022 Hi there,

All above allowances will fall within ambit of Rule 2BB read with s.10(14) of the Income Tax Act, 1961 and should be exempt as such.

However, you need to understand that these allowances or benefits are exempt and not included in income to the extent to which expenses are actually incurred for that purpose.

So if actual expenditure incurred by you is less than allowances granted, difference will be taxable as perquisites.

Author : Ravish Bhatt

Linkedin Profile: https://www.linkedin.com/in/ravish-bhatt/

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