Which pay and allowances heads are taxable under Income Tax ?
Which pay and allowances heads are taxable under Income Tax ? – PCDA Pune – Income Tax List of Taxable Elements of Pay
Which pay and allowances heads are taxable under Income Tax ? – Taxable Element of Pay
Income Tax : List of Taxable Elements of Pay – PCDA Pune
1. Taxable Element of Pay –
| Sl. No. | Taxable Elements of Pay |
| 1. | Pay in the Pay Band |
| 2. | Grade Pay |
| 3. | Military Service Pay |
| 4. | Dearness Allowance |
| 5. | Non-Practicing Allowance (if any) |
| 6. | Hazard/Special Hazard Pay |
| 7. | Para Allowance / Para Reserve Allowance/Special Commando Allowance |
| 8. | City Compensatory Allowance |
| 9. | Deputation (Duty) Allowance (If any) |
| 10. | Reimbursement of Furniture |
| 11. | Reimbursement of Water |
| 12. | Reimbursement of Electricity |
| 13. | Technical Allowance |
| 14. | Qualification Pay |
| 15. | Special Action Group Allowance (on posting to National Security Guard) |
| 16. | Technical Pay |
| 17. | Language Allowance |
| 18. | Qualification Grant |
| 19. | Language Award |
| 20. | Flying Allowance |
| 21. | Leave Encashment on LTC |
| 22. | Specialist Allowance |
| 23. | Test Pilot Allowance |
| 24. | Instructor Allowance |
| 25. | Flight Test Allowance |
| 26. | Security Allowance |
| 27. | Strategic Force Allowance |
Note:Â Provisions are applicable equally for monthly payment of Allowances as well as arrears for the said head of Pay/Allowances.
2.    Non-Taxable Elements of Pay –
| Sl No. | Non-Taxable element of Pay | Authority | Limit of Exemption |
| 1. | Gallantry Award | A.O. 46/79; U/S 10 (18) (i) of IT Acts w.e.f. 1947 | Fully Exempt |
| 2. | Entertainment Allowance | U/S 16 (ii) of IT Act w.e.f. 01/04/81 | A sums equal to 1/5th of salary (excluding any allowance/benefit) or Rs.5000/- per annum whichever is less |
| 3. | Leave Travel Concession (LTC) | U/S 10 (5) of IT Act w.e.f. 01/04/89 | Actual Expenditure upto the limit of entitlement |
| 4. | Foreign Allowance | U/S 10 (7) of IT Act | Fully Exempt |
| 5. | Bhutan Compensatory Allowance (BCA) | AO 395/74 and U/S 10 (7) of IT Act | Fully Exempt |
| 6. | Servant Wages Allowance alongwith BCA | AO 395/74 and U/S 10 (7) of IT Act | Fully Exempt |
| 7. | Purchase of Crockery/Cutlery/ Glassware | U/S 10 (7) of IT Act | Fully Exempt |
| 8. | Outfit allowance on posting to Embassy | U/S 10 (7) of IT Act | Fully Exempt |
| 9. | Arrears of Cash Grant – Foreign Allowance (Nepal) | U/S 10 (7) of IT Act | Fully Exempt |
| 10. | Myanmar Allowance | U/S 10 (7) of IT Act | Fully Exempt |
| 11. | Representation Grant for use of crockery set | U/S 10 (7) of IT Act | Fully Exempt |
| 12 | Encashment of Leave on retirement whether on superannuation/voluntary retirement/release/invalidment etc. |
U/S 10 (10AA) (i) of IT Act w.e.f. 01/04/78 | Fully Exempt |
| 13. | House Rent Allowance/House Rent Reimbursement (HRA/HRR) |
U/S 10 (13A) of IT Act w.e.f. 06/10/1964; Limit of exemption as per Rule 2A of IT Rules |
*Quantum of exemption is least of the following – a) For Bombay/Kolkata/ Delhi Chennai i) Allowance actually received. ii) Rent paid in excess of 10% of salary iii) 50% of salary b) For other cities i) Allowance actually received. ii) Rent paid in excess of 10% of salary. iii) 40% of salary |
| 14. | Children Education Allowance | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl No.5 of the IT Rules |
Rs.100/- per month per child upto a maximum of 2 children. |
| 15. | Hostel Subsidy | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl No.6 of the IT Rules |
Rs.300/- per month per child upto a maximum of 2 children |
| 16. | Siachen Allowance | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl No.1 (II) of the IT Rules |
Rs.7000/ per month w.e.f. 01/08/1997 |
| 17. | Special Compensatory (Remote Locality) Allowance | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.2 of the IT Rules |
Category I – SCA ‘A’ – Rs.1300/- per month Category III – SCA ‘B’ – Rs.1050/- per month. Category IV – SCA ‘C’ – Rs.750/- per month. Category VI – SCA ‘D’ – Rs.200/- per month. |
| 18. | Compensatory Field Area Allowance (CFAA) | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl No.7 of the IT Rules |
Rs.2600/- per month w.e.f. 01/05/1999 |
| 19. | Compensatory Modified Field Area Allowance (CMFAA) | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl No.8 of the IT Rules |
Rs.1000/- per month w.e.f. 01/05/1999 |
| 20. | Any Special Allowance in the nature of Counter Insurgency Allowance (SCCIA) | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.9 of the IT Rules |
Rs.3900/- per month w.e.f. 01/05/1999 |
| 21. | Transport Allowance granted to meet expenditure for the purpose of commuting between place of residence and duty | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.10 of the IT Rules |
For whole of India – Rs.1600/- per month |
| 22. | Transport Allowance granted to a blind or orthopedically handicapped employee with disability of lower extremities, to meet expenditure for the purpose of commuting between place of residence and duty |
U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.11 of the IT Rules |
For Whole of India – Rs.3200/- per month |
| 23. | High Altitude Uncongenial Climate Allowance (HAUCA) | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) Table Sl.No.13 of the IT Rules |
For areas of (a)Altitude of 9000 to 15000 feet (HAUCA ‘I) – Rs.1060/- per month w.e.f. 01/05/1999. (b)Altitude above 15000 feet (HAUCA ‘II’ & ‘III) – Rs.1600/- per month w.e.f. 01/05/1999. |
| 24. | Highly Active Field Area Allowance (HAFA) | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.14 of the IT Rules |
Rs.4200/- per month |
| 25. | Island (duty) Allowance granted to the members of Armed Forces | U/S 10 (14) (ii) of IT Act and Rule 2BB (2) – Table Sl.No.15 of the IT Rules. |
For Andaman & Nicobar and Lakshadweep group of islands – Rs.3250/- per month inserted w.e.f. 29/02/2000. |
| 26. | Outfit Allowance  (Initial/Renewal) | U/S 10 (14) (i) of IT Act and Rule 2BB (1) (f) of IT Rules. |
Fully Exempt |
| 27. | Compensation for the change of uniform | U/S 10 (14) (i) of IT Act and Rule 2BB (1) (f) of the IT Rules |
Fully Exempt |
| 28. | Kit Maintenance Allowance | U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of the IT Rules |
Fully Exempt |
| 29. | Uniform Allowance (MNS) | U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of the IT Rules |
Fully Exempt |
| 30. | Special Winter Uniform Allowance | U/S 10 (14) (i) of IT Act and Rule 2 BB (1) (f) of the IT Rules |
Fully Exempt |
| 31. | Reimbursement of Medical Expenses | U/S 17 (2) (viii) (v) of IT Act | Actual expenditure upto Rs.15000/- per annum. |
| 32. | Any payment from Provident Fund | U/S 10 (11) of IT Act | Fully Exempt |
| 33. | Payment of Compensation – Disability Pension | CBDT F.No. 200/51/99- ITA1 dated 02 Jul 2001 | Fully Exempt |
Note:
1. Provisions are applicable equally for monthly payment of Allowances as well as arrears for the said head of Pay/ Allowances.
2. *Salary for this purpose includes Pay in Pay Band + Grade Pay + MSP (w.e.f. 01 Sep 08) + DA + NPA (if any).
DISCLAIMER: The above provisions are with the understanding and interpretation of IT Act 1961/IT Rules as amended and instructions issued by CBDT from time to time. Rules, provisions, further amendments and clarifications are issued by IT department/CBDT only and this office does not have any role in framing the same except IT deductions at source with reference to them.
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