2. Basis Of Charge Salary is taxable on due or receipt basis whichever is earlier as per section 15. Computation of income under head “Salaries” Salary A Allowances B Perquisites C Gross Salary A+B+C Less : Deduction under section 16 Entertainment allowance deduction [Sec. 16 (ii)] D Professional tax [Sec. 16 (iii)] E Income under the head “Salaries” A+B+C-D-E Note :- Professional tax is deductible on “payment basis”. If it is paid by the employer on behalf of the employee, it is first included in gross salary as perquisite and then deduction is allowed under section 16(iii).
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8. Contd… Transport allowance It is given to an employee to meet his expenditure for the purpose of commuting between office and residence. It is exempt up to Rs. 800 per month .The exemption in Rs 1,600 per month in the case of an employee who is blind or orthopaedically handicapped. In the case of serving chairman and members of UPSC, transport allowance is exempt from tax without any monetary ceiling. Allowance for transport employees It is given to employees of transport undertaking to meet their personal expenditure during performed in the course of running of such transport from one place to another place. The amount is exempt to the extent it does not exceed (a) 70% of the allowance or (b) Rs. 6,000 per month, whichever is lower. Tribal area allowance Exempt up to Rs. 200 per month in some cases. Travelling allowance, conveyance allowance, helper allowance, research helper, uniform allowance These allowances are given to meet specific expenditure in performance of duties of an office. Exemption is available to the extent the amount is utilized for the specific purchase for which the allowance is given Transfer allowance It is exempt from tax to the extent expenditure is incurred in connection with transfer, packing and transportation of personal effects on transfer from one place to another place.
9. Contd… Foreign allowance Exempt from tax if paid outside India by the Government to an Indian citizen for rendering service outside India. Tiffin allowance Taxable Fixed medical allowance Taxable Allowance received by a teacher / researcher from a SAARC member State Not taxable up to 2 year. Sumptuary allowance to serving Chairman/members of UPSC Not chargeable to tax. Allowance to retired Chairman and retired members of UPSC An allowance (subject to a maximum of Rs. 14,000 per month) for defraying the service of an orderly and for meeting expenses incurred towards secretarial assistance on contract basis, is not chargeable to tax.
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11. Contd… Rent-free furnished house Value of “Furniture” will be added to the value of rent-free unfurnished house as computed above. Value of furniture is 10 per cent per annum of cost of furniture to the employer or rent paid / payable of the furnishing by the employer, as the case may be. Concession in rent Value of the perquisite in respect of rent-free furnished/ unfurnished house will be calculated as given above. From the amount so calculated, rent charged by employer shall be deducted. The balance ( if it is positive) is taxable value of the perquisite in respect of concession in rent.
![Basis Of Charge Salary is taxable on due or receipt basis whichever is earlier as per section 15. Computation of income under head “Salaries” Salary A Allowances B Perquisites C Gross Salary A+B+C Less : Deduction under section 16 Entertainment allowance deduction [Sec. 16 (ii)] D Professional tax [Sec. 16 (iii)] E Income under the head “Salaries” A+B+C-D-E Note :- Professional tax is deductible on “payment basis”. If it is paid by the employer on behalf of the employee, it is first included in gross salary as perquisite and then deduction is allowed under section 16(iii).](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)