12 March 2012
(26) House rent allowance (HRA) [Section 10(13A)] – HRA is a special allowance specifically granted to an employee by his employer towards payment of rent for residence of the employee. HRA granted to an employee is exempt to the extent of least of the following : Other Cities 1) HRA actually received. 2) Rent paid-10% of salary for the relevant period 3) 40% of salary for the relevant period Note: 1. Exemption is not available to an assessee who lives in his own house, or in a house for which he has not incurred the expenditure of rent. 2. Salary for this purpose means basic salary, dearness allowance, if provided in terms of employment and commission as a fixed percentage of turnover. 3. Relevant period means the period during which the said accommodation was occupied by the assessee during the previous year.
12 March 2012
Leave travel concession [Section 10(5)] (i) This clause exempts the leave travel concession (LTC) received by employees from their employers for proceeding to any place in India, (a) either on leave or (b) after retirement from service or (c) after termination of his service. (ii) The benefit is available to individuals - citizens as well as non-citizens - in respect of travel concession or assistance for himself or herself and for his/her family- i.e., spouse and children of the individual and parents, brothers and sisters of the individual or any of them wholly or mainly dependent on the individual. (iii) Limit of exemption - The exemption in all cases will be limited to the amount actually spent subject to such conditions as specified in Rule 2B regarding the ceiling on the number of journeys for the place of destination. Under Rule 2B the exemption will be available in respect of 2 journeys performed in a block of 4 calendar years commencing from the calendar year 1986. Where such travel concession or assistance is not availed by the individual during any block of 4 calendar years, one such unavailed LTC will be carried forward to the immediately succeeding block of 4 calendar years and will be eligible for exemption.
(iv) Monetary limits Where the journey is performed on or after the 1.10.1997, the amount exempted under section 10(5) in respect of the value of LTC shall be the amount actually incurred on such travel subject to the following conditions: (1) where it is performed by air, an amount not exceeding the air economy fare of the National Carrier by the shortest route to the place of destination; (2) where places of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air an amount not exceeding the airconditioned first class rail fare by the shortest route to the place of destination; and (3) where the places of origin of journey and destination or part thereof are not connected by rail, the amount eligible for exemption shall be,— (A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination ; and (B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail. Note: The exemption referred to shall not be available to more than two surviving children of an individual after 1.10.1998. This restrictive sub-rule shall not apply in respect of children born before 1.10.1998 and also in case of multiple births after one child.
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