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My children are getting scholarship from my company under brilliant student program. Whether it is chargeable to tax?
My children are getting scholarship from my company under the Brilliant Student Program. Is this scholarship taxable? Yes, it is fully exempt from tax under Section 10(16) of the Income Tax Act. As per Section 10(16): "Any scholarship granted to meet the cost of education is exempt from income-tax."Read more
My children are getting scholarship from my company under the Brilliant Student Program. Is this scholarship taxable?
Yes, it is fully exempt from tax under Section 10(16) of the Income Tax Act.
As per Section 10(16):
Hence, It does not matter whether the scholarship is given by a government, a trust, or a private employer, as long as the amount is meant solely for education expenses.
Different scenarios:
How is income tax calculated on LTC or LTA?
How is income tax calculated on LTC (Leave Travel Concession) or LTA (Leave Travel Allowance)? ✅ Relevant Legal Provisions: Section 10(5) of the Income Tax Act, 1961 Rule 2B of the Income Tax Rules, 1962 📜 Bare Act Extract – Section 10(5): “In computing the total income of a previous year of an indiRead more
How is income tax calculated on LTC (Leave Travel Concession) or LTA (Leave Travel Allowance)?
✅ Relevant Legal Provisions:
Section 10(5) of the Income Tax Act, 1961
Rule 2B of the Income Tax Rules, 1962
📜 Bare Act Extract – Section 10(5):
📜 Rule 2B – Conditions for Exemption:
The exemption is available only for travel within India.
The exemption applies to actual travel fare, not for other expenses like sightseeing, food, or hotel stays.
It can be claimed twice in a block of 4 calendar years (current block: 2022–2025).
Exemption allowed for:
Air travel (economy fare of national carrier)
Rail fare (AC first class)
Bus fare (deluxe class, if rail/air not available)
📘 Family Definition (Explanation to Section 10(5)):
Includes:
Spouse
Children (maximum of 2 children born after 1 October 1998)
Parents, brothers and sisters wholly or mainly dependent on the employee
🧮 Tax Calculation – Step-by-Step:
🧾 Illustration:
LTA received: ₹40,000
Actual travel (AC train) fare for eligible family: ₹25,000
Exemption allowed: ₹25,000
Taxable Amount: ₹15,000
📌 Other Key Points:
Proof of travel (tickets, boarding passes, etc.) must be retained.
Unused LTC in a block? You can carry forward 1 travel to the next block, and claim it in the first year only.
If LTC is encashed without travel, it becomes fully taxable.
✅ Conclusion:
Under Section 10(5) read with Rule 2B, LTA/LTC is exempt from income tax to the extent of eligible travel fare for journeys within India. Any excess amount or non-travel expenses reimbursed are fully taxable.
See lessIs group Insurance premium paid by employer is taxable in the hand of employee?
Is Group Insurance Premium paid by the employer taxable in the hands of the employee? ✅ Relevant Legal Provisions: Section 17(2)(viii) of the Income Tax Act, 1961 Rule 3(1) and Rule 3(2) of the Income Tax Rules, 1962 📜 As per Section 17(2)(viii): “Perquisite” includes the value of any other benefitRead more
Is Group Insurance Premium paid by the employer taxable in the hands of the employee?
✅ Relevant Legal Provisions:
Section 17(2)(viii) of the Income Tax Act, 1961
Rule 3(1) and Rule 3(2) of the Income Tax Rules, 1962
📜 As per Section 17(2)(viii):
🔍 Analysis: Types of Group Insurance
🧾 Rule 3 Clarification – Perquisite Valuation:
As per Rule 3(1) and 3(2) of the Income Tax Rules, premium paid for group insurance is not treated as a taxable perquisite unless the employee is the direct beneficiary or owner of the policy.
📘 Conclusion:
✅ If your employer pays the premium of group insurance policies (term life, health, or personal accident), it is not taxable in your hands as an employee.
❌ However, if the employer assigns the policy to you, especially in case of a Keyman Insurance, the surrender value or assigned value becomes taxable under the head “Salaries”.
See lessHow tax is calculated on interest free loan provided by my company?
How is tax calculated on interest-free loans provided by my company (employer)? If your company grants you an interest-free or concessional loan, it is treated as a taxable perquisite under Salary if the total loan exceeds ₹20,000, except in cases like medical treatment for specified illnesses. TheRead more
How is tax calculated on interest-free loans provided by my company (employer)?
If your company grants you an interest-free or concessional loan, it is treated as a taxable perquisite under Salary if the total loan exceeds ₹20,000, except in cases like medical treatment for specified illnesses. The tax is computed based on SBI rates and added to your gross salary.
✅ Relevant Legal Provisions:
Section 17(2)(viii) of the Income Tax Act, 1961
Rule 3(7)(i) of the Income Tax Rules, 1962
As per Section 17(2)(viii):
Explanation: The provision includes concessional or interest-free loans as perquisites taxable under the head Salary.
🧾 Rule 3(7)(i) – How to Compute Taxable Value of Interest-Free Loan:
🧮 How to Calculate Taxable Perquisite:
Perquisite Value=(Loan Amount×SBI Rate×No. of months)−Interest, if any, recovered from employee
SBI Rate: As per prevailing SBI lending rate on 1st April of the financial year
Loan Value: Opening balance at the beginning of each month
Exemption: If aggregate loan amount is ≤ ₹20,000, no perquisite value is taxable
📘 Illustration:
Loan Amount: ₹5,00,000 (interest-free)
Date of loan: 1st April 2024
SBI rate on 1st April 2024: 9% p.a.
Interest recovered from employee: ₹0
Taxable Perquisite=₹5,00,000×9%=₹45,000
₹45,000 will be treated as salary income and taxed at slab rate applicable to the employee.
📌 Special Cases:
How to get deduction of expenditure incurred for amalgamation/demerger under Income Tax Act?
How to get deduction of expenditure incurred for amalgamation/demerger under the Income Tax Act? As per Section 35DD: "Where an assessee, being an Indian company, incurs any expenditure for the purpose of amalgamation or demerger of an undertaking, the assessee shall be allowed a deduction ofRead more
How to get deduction of expenditure incurred for amalgamation/demerger under the Income Tax Act?
As per Section 35DD:
Explanation:
If an Indian company incurs legal, professional, or administrative expenses in connection with amalgamation or demerger, such expenses cannot be claimed entirely in the year of expenditure. Instead:
1/5th (20%) of the total expenditure is allowed as a deduction in the year of amalgamation/demerger, and
The remaining 4/5th is allowed equally over the next 4 years.
✅ Conditions for Claim under Section 35DD:
❌ Not Covered Under Section 35DD:
Expenses for takeover or acquisition not resulting in amalgamation/demerger
Expenses incurred by non-Indian companies
Claimed under any other section, such as 37(1)
See less
How to get deduction of expenditure incurred for VRS under income tax act?
How to get deduction of expenditure incurred for Voluntary Retirement Scheme (VRS) under the Income Tax Act? ✅ Relevant Legal Provision: Section 35DDA of the Income Tax Act, 1961 📜 Bare Act Extract – Section 35DDA (1): "Where an assessee incurs any expenditure in any previous year by way of paymentRead more
How to get deduction of expenditure incurred for Voluntary Retirement Scheme (VRS) under the Income Tax Act?
✅ Relevant Legal Provision:
Section 35DDA of the Income Tax Act, 1961
📜 Bare Act Extract – Section 35DDA (1):
🧮 Explanation & Computation of Deduction:
If a company or firm pays any amount to employees under a Voluntary Retirement Scheme (VRS), the deduction is not allowed as a lump sum in the same financial year. Instead:
1/5th (20%) of the VRS expense is allowed in the year of payment, and
The remaining 4/5th is spread equally over the next four financial years.
This ensures a structured deduction benefit over five years.
✅ Conditions to Claim Deduction under Section 35DDA:
❌ Deduction Not Allowed If:
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-
-
See lessVRS scheme not in accordance with Rule 2BA
Expenditure not actually paid (i.e., only provisioned)
Claimed fully in one year (not permissible)
What is the condition for getting deduction of Insurance Premium paid for the health of employees under Income Tax Act>
As per Section 36(1)(ib) – Medical Insurance Premium: "Any premium paid by the employer by any mode of payment other than cash to effect or to keep in force an insurance on the health of his employees under a scheme framed by the General Insurance Corporation of India as approved by the Central GoveRead more
As per Section 36(1)(ib) – Medical Insurance Premium:
Conditions for Deduction: