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How entertainment allowance is taxed?
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:
₹5,000
20% of Basic Salary (excluding allowances, benefits, and perquisites)
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.
See less👉 The entire amount received as Entertainment Allowance is fully taxable under Salary Income.
My employer provided me joining bonous, Travelling cost and relocation charges, are these taxable? if yes, How?
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:
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:
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See lessAlways 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
My employer reimbursed me the tour expenses, are these reimbursement exempted from income tax?
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:
🧳 Expenses must be for official purposes only (like meetings, inspections, training, client visits).
🧾 Actual bills and vouchers must be submitted to the employer.
📝 No profit should arise to the employee from the reimbursement.
💼 The trip should be authorized by the employer.
🗂️ Employer should maintain records of:
Nature and purpose of the travel
Amount reimbursed
Evidence of expenses (invoices, tickets, boarding passes, etc.)
Not Exempt If:
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See lessThe 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.
Is uniform allowance provided to an employee is taxable?
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:
The allowance must be granted specifically for uniforms.
Uniform must be distinctive and mandatory for the nature of the job (e.g., police, factory workers, aviation staff).
The employee must actually spend the allowance for the intended purpose.
The employer should prescribe or enforce the wearing of such uniforms during duty.
See lessIs hill area allowance taxable?
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.
Exemption Limits:
The exemption is based on location and altitude, and the Central Government has notified specific limits:
(As per latest CBDT Notifications – rates subject to change by government order)
Points to Remember:
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See lessAllowance 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.
I am posted at Arunachal Pradesh and getting Rs 2500 per month, is this amount taxable?
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):
🔹 ₹3,000 per month (for posting in border, remote or hilly areas as notified).
Note:
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See lessExemption 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.
How much of children education allowance is taxable?
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:
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See lessApplicable 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.