Home/Questions/Page 46

Taxchopal Latest Questions

CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    A “Specified Employee” is a category of employee for whom certain perquisites (non-monetary benefits) provided by the employer are fully taxable under Section 17(2) of the Income Tax Act, 1961, read with Rule 3 of the Income Tax Rules, 1962. As per Explanation (iv) to Section 17(2) of the Income TaxRead more

    A “Specified Employee” is a category of employee for whom certain perquisites (non-monetary benefits) provided by the employer are fully taxable under Section 17(2) of the Income Tax Act, 1961, read with Rule 3 of the Income Tax Rules, 1962.

    As per Explanation (iv) to Section 17(2) of the Income Tax Act, an employee is called a Specified Employee if he/she meets any one of the following conditions:

    ✅ Conditions:

    1. Director of the company

    2. Employee with substantial interest (i.e., owns ≥20% of equity shares in the company)

    3. Employee whose salary (excluding non-monetary benefits) exceeds ₹50,000 per annum

    🟡 Note: Salary here includes basic, DA (if part of retirement), bonus, commission, allowances, etc.

     

     

     

     

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Hostel Expenditure Allowance is partially exempt from tax under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(2)(g) of the Income Tax Rules, 1962. Exemption Limit: As per Rule 2BB(2)(g): Hostel Expenditure Allowance is exempt up to ₹300 per month per child, for a maximum of 2 chRead more

    Hostel Expenditure Allowance is partially exempt from tax under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(2)(g) of the Income Tax Rules, 1962.

    Exemption Limit:

    As per Rule 2BB(2)(g):

    Hostel Expenditure Allowance is exempt up to ₹300 per month per child, for a maximum of 2 children.

    ✅ Maximum exemption = ₹300 × 2 children × 12 months = ₹7,200 per annum

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Children Education Allowance (CEA) is partially exempt under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(2)(c) of the Income Tax Rules, 1962. Exemption Limit (as per Rule 2BB): ₹100 per month per child For a maximum of 2 children ✅ Total exemption allowed = ₹100 × 2 × 12 = ₹2,Read more

    Children Education Allowance (CEA) is partially exempt under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(2)(c) of the Income Tax Rules, 1962.

    Exemption Limit (as per Rule 2BB):

    • ₹100 per month per child

    • For a maximum of 2 children

    ✅ Total exemption allowed = ₹100 × 2 × 12 = ₹2,400 per annum

    Important Points:

    • Applicable only if CEA is specifically mentioned in the salary structure.

    • If you have more than 2 children, the exemption still applies to only 2 children.

    • No requirement to submit bills unless specifically asked by Assessing Officer.

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    No, the amount may not be fully taxable – you may get an exemption under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB of the Income Tax Rules, 1962 As per Rule 2BB(1)(b): If an employee is posted in the North Eastern Region (which includes Arunachal Pradesh), he is entitled toRead more

    No, the amount may not be fully taxable – you may get an exemption under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB of the Income Tax Rules, 1962

    As per Rule 2BB(1)(b):

    If an employee is posted in the North Eastern Region (which includes Arunachal Pradesh), he is entitled to exemption up to:

    🔹 ₹3,000 per month (for posting in border, remote or hilly areas as notified).

    Note:

    • Exemption is only available for government employees or those posted as per government orders.

    • Posting must be in a notified area as per CBDT Circulars (North Eastern Region is included).

    • This allowance is also known as Special Compensatory Allowance (SCA) or Remote Area Allowance.

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Hill Area Allowance is partially exempt under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(1)(a) of the Income Tax Rules, 1962. Section 10(14)(ii): Allows exemption for special allowances or benefits granted to meet personal expenses due to conditions of employment such as locaRead more

    Hill Area Allowance is partially exempt under Section 10(14)(ii) of the Income Tax Act, 1961, read with Rule 2BB(1)(a) of the Income Tax Rules, 1962.

    Section 10(14)(ii): Allows exemption for special allowances or benefits granted to meet personal expenses due to conditions of employment such as location (hill area, remote area, etc.).

    Rule 2BB(1)(a): Specifically lists “Hill Compensatory Allowance” as an exempt allowance, subject to limits depending on the location and posting.

    Exemption Limits:

    The exemption is based on location and altitude, and the Central Government has notified specific limits:

    Location/Conditions Max Exemption (per month)
    Manipur, Mizoram, Tripura, Nagaland ₹300
    Hilly areas of Uttar Pradesh, Himachal, Assam ₹300
    Sikkim, Kashmir Valley, Darjeeling ₹600
    High altitude areas (1,000 – 2,000 m) ₹300
    Very high altitude areas (2,000 – 3,500 m) ₹1,000
    Extremely high altitude areas (above 3,500 m) ₹1,600

    (As per latest CBDT Notifications – rates subject to change by government order)

    Points to Remember:

    • Allowance must be specifically granted for posting in the notified hill area.

    • Any amount received over the exempt limit is fully taxable.

    • Proof of posting in the notified area may be required in assessment.

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    This answer was edited.

    Uniform Allowance is exempt from tax under certain conditions as per Section 10(14)(i) of the Income Tax Act, 1961, read with Rule 2BB(1)(f) of the Income Tax Rules, 1962. Section 10(14)(i): Exempts allowances granted to meet expenses incurred wholly, necessarily, and exclusively in the performanceRead more

    Uniform Allowance is exempt from tax under certain conditions as per Section 10(14)(i) of the Income Tax Act, 1961, read with Rule 2BB(1)(f) of the Income Tax Rules, 1962.

    Section 10(14)(i): Exempts allowances granted to meet expenses incurred wholly, necessarily, and exclusively in the performance of duties of an office or employment.

    And as per Rule 2BB(1)(f):  Uniform Allowance is exempt only to the extent it is actually spent by the employee for the purchase or maintenance of a uniform which is compulsorily worn during duty.

    Conditions for Exemption:

    1. The allowance must be granted specifically for uniforms.

    2. Uniform must be distinctive and mandatory for the nature of the job (e.g., police, factory workers, aviation staff).

    3. The employee must actually spend the allowance for the intended purpose.

    4. The employer should prescribe or enforce the wearing of such uniforms during duty.

     

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Yes, reimbursement of actual tour expenses incurred wholly and exclusively for official purposes is exempt from tax under the Income Tax Act, provided certain conditions are met. Section 10(14)(i) of the Income Tax Act, 1961, read with Rule 2BB(1)(b) of the Income Tax Rules, 1962, covers travel andRead more

    Yes, reimbursement of actual tour expenses incurred wholly and exclusively for official purposes is exempt from tax under the Income Tax Act, provided certain conditions are met.

    Section 10(14)(i) of the Income Tax Act, 1961, read with Rule 2BB(1)(b) of the Income Tax Rules, 1962, covers travel and tour-related allowances and reimbursements.

    Exemption Conditions:

    1. 🧳 Expenses must be for official purposes only (like meetings, inspections, training, client visits).

    2. 🧾 Actual bills and vouchers must be submitted to the employer.

    3. 📝 No profit should arise to the employee from the reimbursement.

    4. 💼 The trip should be authorized by the employer.

    5. 🗂️ Employer should maintain records of:

      • Nature and purpose of the travel

      • Amount reimbursed

      • Evidence of expenses (invoices, tickets, boarding passes, etc.)

    Not Exempt If:

    • The amount is paid as a fixed allowance, not against actual bills.

    • The travel is personal or partly personal.

    • The employee fails to provide supporting documents.

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    This answer was edited.

    Short Answer: Component Taxability Reason Joining Bonus ✅ Taxable Treated as a part of salary under Section 17(1) of the Income Tax Act Travelling Cost ❌/✅ Depends Exempt if for official joining & supported by bills; Taxable otherwise Relocation Charges ❌/✅ Depends Exempt if reimbursement of actRead more

    Short Answer:

    Component Taxability Reason
    Joining Bonus ✅ Taxable Treated as a part of salary under Section 17(1) of the Income Tax Act
    Travelling Cost ❌/✅ Depends Exempt if for official joining & supported by bills; Taxable otherwise
    Relocation Charges ❌/✅ Depends Exempt if reimbursement of actual expense for shifting house; Taxable if lump sum

    Legal References:

    1. Section 17(1) – Definition of Salary

    Includes bonus, perquisites, and profits in lieu of salary. Therefore, Joining Bonus is fully taxable in the year of receipt.

    2. Section 10(14)(i) read with Rule 2BB – Allowances & Reimbursements

    Reimbursement of actual expenses (like travel for joining or household shifting) can be exempt, if incurred wholly for employment and not a personal benefit.

    Important Tips:

    • Always submit original bills for travel & relocation reimbursements.

    • If paid as lump sum, and not based on bills – the whole amount is taxable.

    • Employers must report these benefits in Form 16 under the appropriate head

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Section 16(ii) of the Income Tax Act, 1961, deals with the deduction of Entertainment Allowance. For Government Employees: Entertainment Allowance is first included in salary and then deduction is allowed under Section 16(ii) up to the least of the following: ₹5,000 20% of Basic Salary (excluding alRead more

    Section 16(ii) of the Income Tax Act, 1961, deals with the deduction of Entertainment Allowance.

    For Government Employees:

    Entertainment Allowance is first included in salary and then deduction is allowed under Section 16(ii) up to the least of the following:

    1. ₹5,000

    2. 20% of Basic Salary (excluding allowances, benefits, and perquisites)

    3. Actual entertainment allowance received

    ✅ Only Central or State Government employees are eligible for this deduction.

    👨‍💻 For Non-Government (Private Sector) Employees:

    ❌ No deduction is allowed.
    👉 The entire amount received as Entertainment Allowance is fully taxable under Salary Income.

    See less
    • 0
CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    National Pension System (NPS) is a government-sponsored pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows employees (public, private) and self-employed individuals to contribute regularly towards a retirement corpus, which they can withdraw partly aRead more

    National Pension System (NPS) is a government-sponsored pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

    It allows employees (public, private) and self-employed individuals to contribute regularly towards a retirement corpus, which they can withdraw partly at retirement, while the rest is used to buy a pension (annuity).

    Tax Benefits under the Income Tax Act (Post-Budget 2025):

    1. Employee’s Contribution:

    • Section 80CCD(1):

      • Deduction up to 10% of salary (Basic + DA) for salaried individuals.

      • For self-employed individuals, deduction up to 20% of gross total income.

      • This deduction is part of the overall limit of ₹1.5 lakh under Section 80CCE.

    • Section 80CCD(1B):

      • Additional deduction of ₹50,000, over and above the ₹1.5 lakh limit under Section 80C.

      • Available to both salaried and self-employed individuals.

    2. Employer’s Contribution:

    • Section 80CCD(2):

      • Employer’s contribution up to 10% of salary (Basic + DA) is deductible for the employee.

      • For Central Government employees, this limit is enhanced to 14%.

      • This deduction is over and above the limits under Sections 80C and 80CCD(1B).

    ax Treatment on Withdrawal:

    • Lump Sum Withdrawal:

      • Upon retirement, up to 60% of the accumulated corpus can be withdrawn as a lump sum.

      • This amount is exempt from tax under Section 10(12A).

    • Annuity Purchase:

      • The remaining 40% must be used to purchase an annuity, which provides regular pension income.

      • Annuity income is taxable in the year of receipt under the head “Income from Other Sources.”

    See less
    • 0
Load More Questions