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Is 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.
How much of Hostel expenditure allowance is taxable?
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):
✅ Maximum exemption = ₹300 × 2 children × 12 months = ₹7,200 per annum
See lessWho is specified employee?
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:
Director of the company
Employee with substantial interest (i.e., owns ≥20% of equity shares in the company)
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 lessHow to calculate tax on rent free furnished accommodation provided by the company?
As per Section 17(2)(ii) read with Rule 3(1) of the Income Tax Rules, 1962, if an employer provides a rent-free house, the value of the perquisite is calculated as: Step 1: Calculate Unfurnished Accommodation Value If employer owns the house: 15% of salary (metro city) 10% of salary (cities with 10–Read more
As per Section 17(2)(ii) read with Rule 3(1) of the Income Tax Rules, 1962, if an employer provides a rent-free house, the value of the perquisite is calculated as:
Step 1: Calculate Unfurnished Accommodation Value
If employer owns the house:
15% of salary (metro city)
10% of salary (cities with 10–25 lakh population)
7.5% of salary (other towns)
If house is on lease/rent:
Lower of actual rent paid by employer or above % of salary
Here, “salary” includes:
Step 2: Add Furniture Value (For Furnished Accommodation)
If the house is furnished, then the perquisite value is increased by:
🪑 Furniture includes – TV, fridge, sofa, washing machine, air conditioner, etc.
See lessMy company is giving me accommodation in its housing society at concessional rent. is it taxable? How?
Yes, it is taxable as a perquisite under the Income Tax Act. As per Section 17(2)(ii) of the Income Tax Act, if your employer provides you a house at a rent lower than the market value, the difference is considered a taxable benefit (perquisite). The perquisite value is calculated as per Rule 3(1likRead more
Yes, it is taxable as a perquisite under the Income Tax Act.
As per Section 17(2)(ii) of the Income Tax Act, if your employer provides you a house at a rent lower than the market value, the difference is considered a taxable benefit (perquisite).
The perquisite value is calculated as per Rule 3(1like this:
If employer owns the house:
15% of your salary (in metro cities) or 10% or 7.5% in other cities (based on population) Less Rent actually paid by you = Taxable perquisite amount
If employer has rented the house:
Lower of actual rent paid by employer OR above % of salary Less Rent paid by you = Taxable perquisite
👉 This amount is added to your salary income and taxed as per your slab.
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