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.

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:

• 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

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.”