Allowances exempted under section 10(14)(i) of Income Tax Act 1961
Section 10(14)(i) of the Income Tax Act provides specific allowances to employees to cover expenses incurred while performing their official duties. These allowances are exempt from tax up to the amount actually spent by the employee for the intended purpose. Any unspent amount will be taxable. The exemption is limited to the lesser of the following two amounts:
(a) The amount of the allowance received.
(b) The actual amount spent by the employee for the intended purpose.
Key Allowances Under Section 10(14)(i)
1. Helper Allowance:
This allowance is provided to cover expenses for hiring a helper required for official duties.
Exemption: Up to the actual amount spent. Any excess will be taxable.
2. Uniform Allowance:
This allowance covers the cost of acquiring or maintaining an official uniform.
Exemption: Up to the actual expenditure incurred. Any excess will be taxable.
3. Academic Research Allowance:
This allowance is for expenses related to academic research.
Exemption: Up to the actual expenditure incurred. Any excess is taxable.
4. Conveyance Allowance:
This allowance is provided for expenses incurred during the performance of official duties.
Exemption: Up to the actual expenditure incurred. Any excess will be taxable.
5. Travelling or Transfer Allowance:
This allowance covers expenses related to travel or transfer for employment purposes.
Exemption: Up to the actual expenditure incurred. Any excess will be taxable.
Any allowance granted to meet travel costs on tour or transfer is also exempt.
6. Daily Allowance:
This allowance is given to meet daily charges incurred by an employee on tour or during a journey related to a transfer.
It includes any sum paid in connection with transfer, packing, and transportation of personal effects.
Exemption: Up to the amount actually spent. Any excess will be taxable.
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Conclusion
Allowances for exemption under section 10(14)(i) mentioned in points (i) to (vi) are exempt to the extent of the amount spent by the employee for the specific purpose for which the allowance is provided. Any unspent amount will be taxable. Understanding these exemptions can help employees and employers manage their finances and tax liabilities more effectively.
By following these guidelines, employees can ensure that they take full advantage of the tax exemptions available under Section 10(14)(i) of the Income Tax Act, while remaining compliant with tax regulations.
Also Read: Tax Exemption on Leave Travel Allowance (LTA) as per Income Tax Act 1961
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