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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: 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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