Mobile phone allowance

This query is : Resolved

Rajkumar Gutti (Querist)
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02 February 2018 WE ARE PAYING MOBILE PHONE ALLOWANCE RS.500/- P.M. BY CASH .
ON BASIS OF CASH PAYMENT VOUCHER TO OUR EMPLOYEE.
IS THIS AMOUNT IS TAXABLE -UNDER INCOME FROM SALARIES.
IS THIS MOBILE PHONE AMOUNT BE A PART OF SALARY & TO BE INCLUDED
IN FORM NO.16 GIVEN BY EMPLOYER TO EMPLOYEE

PLEASE GUIDE US.

RAJKUMAR GUTTI

Z (Expert)
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03 February 2018 In this case, the company is paying an allowance, which would become taxable in the hands of the employees and hence, will be required ot be shown in Form 16.

If, however, the company would be reimbursing for the telecommunication expenses on ACUTAL basis then the same would not have been included in the income.

Rule 3 (7)(ix) of the income tax rules states that-

The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arm’s length transaction as reduced by the employee’s contribution, if any :

Provided that nothing contained in this clause shall apply to the expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer.

[Kindly also refer to sub-clause (viii) of clause (2) of section 17]