Taxable and Non-taxable Pay and Allowances

Taxable and Non-taxable Pay and Allowances – Principal Controller of Defence Accounts has issued classification of Pay and allowances

Taxable and Non-taxable Element of Pay and allowances

issued by 

Principal Controller of Defence Accounts (Officers)

Ministry of Defence

Government of India

The table of Taxable & Non-Taxable Element of Pay as per Income Tax Act. Provisions are applicable equally for monthly payment of Allowances as well as arrears for the said head of Pay/ Allowances :-

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. Gallantary 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 Fully Exempt
11. Representation Grant for use of crockery set U/S 10 (7) of 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 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 2BB (1) (f) of the IT Rules Fully Exempt
30. Special Winter Uniform U/S 10 (14) (i) of IT Act and Rule 2BB (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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