Income Not included under the Head Salaries for Computing Income Tax

Income Not included under the Head Salaries for computing Income Tax under Section 192 of the Income Tax Act 1961

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Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act :-

Leave Travel Concession (LTC):

The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) after retirement from service, or, after termination of service to any place in India is exempt under Section 10(5) subject, however, to the conditions prescribed in Rule 2B of the Rules.

The following are the important points, to be taken into consideration:

Number of Trips – The exemption shall be available in respect of 2 journeys performed in the block of 4 calendar years.

Without performing any journey and incurring expenses thereon, no exemption can be

claimed.

The quantum of exemption will be subject to the following maximum limits for journeys performed on or after 01.10.1997:

Journey Performed by	Exemption Limit
Air	Air Economy fare of the national carrier (Air India) by theshortest route to the place of destination
Places connected by railand journey performed by any mode other than by air.	First Class Air conditioned rail fare by the shortest route tothe place of destination
Place of origin anddestination or part thereof not connected by rail.	a) Where public transport system exists, first class ordeluxe class fare on such transport by the shortest route to the place of destination. b) Where no public transport system exists, first class A/C rail fare, for the distance of the journey by the shortest route, as if the journey has been performed by rail

This exemption is limited to the actual expenses incurred on the journey which in turn is strictly limited to expenses on air fare, rail fare and bus fare only. No other expenses like local conveyance, sight-seeing expense etc., shall qualify for exemption.

Where the journey is performed in a circuitous route, the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption is limited to what is admissible for the journey from the place of origin to the farthest point reached in India, by the shortest route.

Restriction on children – The exemption will not be available to more than 2 surviving children of an individual born after 01.10.1998. This restriction shall not apply in respect of children born before 01.10.1998 and also in case of multiple births after one child. It may be noted that section 2 (15B) of the Act defines a child as includes a step child and an adopted child of the individual.

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