Taxable and Non-Taxable Allowances to PBOR

Taxable and Non-Taxable Allowances applicable to PBOR in armed forces

Due to the special nature of duties of the armed forces, certain allowances are paid to meet that requirement. Of these allowances some are subject to tax and some are not.

Filing of returns

When it comes to filing of returns, the deadline for all salaried individuals is the 31st of July every year. After the completion of the financial year, respective CDAs/AFCAO issue Form 16 for the amount of tax deducted and deposited into Government. This is the basis for filing tax returns. The ITRs can be filed online through the Income Tax tax filing portal where the income is more than Rs 5 lakh and in cases where it is less than Rs 5 lakh manual filing is also allowed. Manual filing can be done on their own or often it is done through their respective CDAs/AFCAO.

Allowances which are taxable

Due to the special nature of duties of the armed forces, certain allowances are paid to meet that requirement. Of these allowances some are subject to tax and some are not. The ones falling  under the tax purview are Military Service Pay, Grade Pay, Classification Allowance Group Pay, Composite Personal Maintenance Allowance, Good Conduct / Service Badge Pay, House Rent Allowance, Language allowances, Instructional Duty Allowances , Officiating Allowances, Para /Flying Allowances/Submarine Allowances, special Forces allowance, Sea Duty Allowance etc. Other normal allowances like Dearness Allowance, Transportation Allowance (limit) are all taxed at the rates according to the respective Income Tax slab of PBOR.

Allowances taxed according to limits

Under the Sixth Pay Commission the rates for certain risk related allowances were increased. However, Government has given exemptions or limits to certain special allowance up till which it will remain non-taxable. Rest of the amounts paid under those allowances would be taxed. Those are
1 Siachen Allowance Rs.7000/-per month
2 Special Compensatory (Remote locality)allowance Category 1-SCA “A” Rs.1300/-per month
3 SC(RL)A Category II-SCA “B” Rs.1050/-per month
4 SC(RL)A Category III-SCA “C” Rs 750/-per month
5 SC(RL)A Category IV-SCA “D” Rs 200/-per month
6 Compensatory Field Area Allowance (CFAA) Rs 2600/-per month
7 Compensatory Modified Field Area Allowance (CMFAA) Rs 1000 per month
8 Any special Allowance in the nature of Counter-Insurgency Allowance(SCCIA) Rs 3900 per month
9 HAUCA for Altitude of 9000 to 15000 feet (HAUCA ‘I’) Rs 1060 per month
10 HAUCA for Altitude above 15000 feet (HAUCA ‘II and III’) Rs 1600/- per month
11 Highly Active Field Area Allowance (HAFA) Rs 4200/- per month
12 Island (duty) allowance granted to the members of Armed Forces For Andaman and Nicobar and Lakshadweep group of islands Rs 3250/- per month
13 Hard area Allowance Rs 1300/- per month
14 CEA Rs 100/- per month per child for maximum of 2 children
15 Hostel Subsidy Rs 300/- per month per child for maximum of 2 children
16 Entertainment allowance A Sum equal to 1/5th of salary (excluding any allowance / benefit) or Rs 5000/-per annum whichever is less.
17 LTC Actual expenditure up to the limit of entitlement
18 HRA/HRR For Bombay / Kolkata / Delhi/Chennai The least of the following three,i.Allowance actually received ii.Rent paid in excess of 10% of salary iii.50% of salary
19 HRA/HRR for other cities The least of the following three i.Allowance actually receivedii.Rent paid in excess of 10% of salaryiii.40% of salary
20 Special compensatory (tribal areas/schedule areas/agency areas)allowances For specified places –Rs.200/- per month
21 Transport allowance granted to an employee to meet his expenditure for the purpose of commuting between place of his residence & duty. For whole of India Rs.800/- per month
22 Transport allowance granted to a blind or orthopadeically handicapped employee with disability of lower extremities to meet his expenditure for the purpose of commuting between place of his residence & duty. For whole of India Rs.1600/- per month

Source: PCDA(O) Pune

 

Fully Exempt allowances

The below mentioned allowances would be entirely exempt from payment of income taxes. Some of the below are paid only to officers.

  • Gallantry Award
  • Foreign Allowance
  • Bhutan Compensatory Allowance
  • Servant wages Allowance
  • Purchase of Crockery / Cutlery / Glassware
  • Outfit Allowance on posting to Embassy
  • Arrears of cash Grant Foreign Allowance (Nepal)
  • Myanmar Allowance
  • Representational Grant for use of crockery set
  • Encashment of Leave on retirement whether on superannuation or otherwise
  • Any Allowances granted for encouraging academic, research and training pursuits in educational & research institution (training & study leave allowance)
  • Outfit Allowance
  • Compensation for the change of uniform
  • Kit maintenance Allowance
  • Uniform Allowance (MNS)
  • Special Winter uniform Allowance
  • Any payment from provident fund
  • Payment of compensation Disability Pension
  • Reimbursement of Medical Expenses

Calculation of Taxes

Taxes are calculated after deducting the amount of allowances deductible from the pay.Tax deductions are made at source by CDA/AFCAO. It is also essential that the individual also promptly informs the authorities of the other deductions he would be claiming under various provisions of Income Tax Act under Sec 80 and  other acts like PPF, Insurance, house loan EMI or principal repayments etc.

Refund of Taxes If any

After the IT return is filed, the concerned Assessing Officer would assess the return, determine if taxes are paid accurately and in case taxes are underpaid, a Demand Notice would be raised. If there is excess payment of taxes, a refund will be initiated. The refund will be credited directly into the bank account provided in the return, under intimation to the individual. It is therefore mandatory that email and bank account details are filled in accurately in the ITR.
Source :  Moneycontrol.com

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