06 February 2014
The exemption would be available to the extent of actual expenditure incurred. Per Diem allowance should not be liable to tax in India to the extent actual bills are submitted by the employees. However, any allowance that is paid in excess of actual bills submitted would be considered as taxable in India. But where the employee is on deputation for longer period, the exemption may be challenged by the tax authorities on the ground that the employee concerned is not on tour but is actually transferred overseas.
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