Salary Special Allowance - Section 10(14)(i)

@comandfin

What is an Allowance?

It is a fixed amount of money that an employer offers to its employees. The employers pay it over and above the basic pay and dearness allowance. The objective is to meet the specific requirements of the employees. These allowances are a part of the salary and hence taxable. However depending on the type of allowance, it is either exempt or taxable. 

What is Special Allowance in Salary?

The special allowance is offered to the employees to enable them in meeting their expenses. They incur these expenses while performing their duties of an office or employment of profit. The amount varies from one company to another as per the need. It is a part of the fixed pay. You can know the details of the allowance either in the offer letter or monthly pay slip. Since it forms a part of the salary it is taxable in the hands of the employee. 
Special allowances are exempt from tax under section 10(14) of the Income Tax Act, 1961. 

Any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17. The grant is specifically to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit. It is exempt to the extent to which such expenses are actually incurred for that purpose.

Any such allowance either to meet his personal expenses at the place of office or employment or at the place where he ordinarily resides, or to compensate him for the increased cost of living. It is exempt from tax.

Taxability of Special Allowance

The categories of special allowances can be divided into 2 types. To begin with, a few allowances are fully taxable. While others are either partially exempt or fully exempt. However, the following conditions must be met:

The payment is not in the nature of a perquisite.

It is not of personal nature

Offered solely for the purpose of to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit

The exemption is limited to the amount received by the employee and actually spent for that purpose.

The Income Tax Act provides the limit for exemption. It does not prescribe an upper limit for the allowance than an employer can offer.

[senthilkumarm]

After introduction of standard deduction sec 10(14)(ii) is not available now.
But Still sec 10(14)(i) is available for exemption.

[PreetiKumari_]

Is uniform allowance benefit available in new tax regime?

[RYX]

Sir Disability Govt employees may benefit under section 10 (14) i ?

[anmoljain]

Hey, Great videos! Question around driver allowance, is it necessary to have a car in name to claim this? can we claim this with a car that is in parents name?

[EREHATSHAMAHAMEDNOIDA]

hai sir Can I pay some amount from Special Allowances to my personal private assistant for my personal convey for sorting the something related to my official work and I am CSE IT in co-operate MNC company employee

[sunilbhatt]

Sir, How IT department will verify whether expenses claimed are actually incurred by the assessee?

[Ram-kukb]

Can you claim this deduction even you have claimed standard deduction of Rs.50000 ?

[beenachoudhary]

Hello Sir, kya nationalised bank employees ko milne wala special allowance exempt hota hai?

[syedazhar]

Hi CA Sir, Thanks for the info, if the spl allowances in salary slip is Rs.2, 00, 000 can i avail the benefit of Rs.150, 000/- which is 75% and if IT dept ask me to produce the bills against so petrol, trail travel, purchase of office attire bills are enough.
pls help me

[abhishekguha]

What is the maximum limit for special allowance?

[-se-]

Hi bro agar wo ctc me hai or kharch nai kie to wo salary me aingr na ? Tax deduction hogi bas?