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Finance Manager
Shah01ankita
Talent Acquisition / Consultant - Catalis
Premkumar Nair
Manager (hr)-retired
Priya Kaushik
Accounts Executive
+3 Others

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Dear All, Could you please tell me if special allowance is coming under tax ? is it a taxable component? Is mobile allowance a taxable component? Regards Moumita
From India, Bangalore
Special allowances are taxable by itself.... However if you are distincting it like say entertainment allowance, mobile allowance, etc, you may save on it...

Mobile Allowance - Fix a monthly limit on it. What happens here is that the company agrees to pay / reimburse your mobile bills to a max amount of X per month.... However note that the tax liability will be either on the bill amount or the max amount quoted on your salary slip as mobile allowance, which ever is lower...

So say for example, your company is giving you 1000/- mobile allowance per month and your mobile bill is 1500/- then the whole 1000/- will be tax exempted as the whole amount was reimbursed. The additional 500 will be your out-of-pocket expense.

On the other hand, if your mobile allowance is 1000/- and your bill is say 800/- per month, then you'd get tax exemption only on 800 (actuall bill amount) and the balance 200/- will be your taxable income...

Similarly if we distinguish the special allowance as entertainment allowance, a funda similar to mobile allowance is applicable.

However the catch here is the entertainment allowance should be utilized only for business purpose.... So if you are taking your client on business outing, business lunch/dinner etc, those would be included here and reimbursed....

This way you can partially save your tax.....

Hope this helped you and answered your query.

From India, Mumbai
I agree with Ms. Ankita Shah, only with a little change, Mobile Allowance is fully taxable unless and until the same is claimed for official usage. Its better to mark the salary component as Mobile Reimbursement and allocate an amount as per the hierarchy designed by the Company in their Policy. And let the employee claim the bill as per their entitlement. You can include the entitlement in your CTC calculation
From India, Ahmadabad
Dear all,
Generally any expenditure reimbursed by the employer in the course of employment is tax exempt. Simple payment without any such condition, e.g. even medical allowance, is taxable.
Hence, taxability depends on the methodology which is a loophole provided under the IT Act. You may explore and avail it suitably. However, special allowance cannot be considered tax exempt ipso facto.
Rgds.

From India, Mumbai
Is Special Allowance & Dearness Allowance is one & the same? IF no ..what’s the difference
From India, Mumbai
Dearness Allowance Means: In India, Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as a percent of the basic salary. This amount is then added to the basic salary along with house rent allowance to get the total salary. Rates vary as per rural/urban areas etc.
Pensioners and the family pensioners are granted D.A. against the price rise. During the reemployment under Central or State Government, Government undertaking, Autonomous body or Local Body, they are not eligible to draw D.A., in which case D.A. is allowed in addition to fixed pay or time scale. In other cases of reemployment D.A. is allowed subject to the limit of emoluments last drawn. D.A. is not allowed while the pensioner stays abroad and also in case of employees absorbed in public undertaking or bodies. If the pensioner stayed abroad without reemployment, he shall be eligible to draw D.A. on pension.

From India, Delhi
Hi,
If mobile allowance (fixed) send to employee at the time of Salary disbursement, then it comes under ESIC as gross salary increase due to Allowance inclusion. If it is not considered under gross salary then it can be pay separately to employee account? Please confirm.

From India, Kolkata
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