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
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3From India, Bangalore
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Special allowances are taxable by themselves. However, if you are distinguishing it, for example, entertainment allowance, mobile allowance, etc., you may save on it.
Mobile Allowance - Fix a monthly limit on it. The company agrees to pay/reimburse your mobile bills up to a maximum amount of X per month. Note that the tax liability will be either on the bill amount or the maximum amount quoted on your salary slip as a mobile allowance, whichever is lower.
For instance, if your company provides you with a 1000/- mobile allowance per month and your mobile bill is 1500/-, then the entire 1000/- will be tax-exempt as the full 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 800/- per month, you would receive tax exemption only on the 800 (actual bill amount), and the remaining 200/- will be your taxable income.
Similarly, if we differentiate the special allowance as an entertainment allowance, a concept similar to the mobile allowance is applicable.
The catch here is that the entertainment allowance should be utilized only for business purposes. Therefore, expenses like taking your client on business outings, business lunch/dinner, etc., would be included and reimbursed.
This way, you can partially save on your taxes.
I hope this information has been helpful and answered your query.
From India, Mumbai
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Mobile Allowance - Fix a monthly limit on it. The company agrees to pay/reimburse your mobile bills up to a maximum amount of X per month. Note that the tax liability will be either on the bill amount or the maximum amount quoted on your salary slip as a mobile allowance, whichever is lower.
For instance, if your company provides you with a 1000/- mobile allowance per month and your mobile bill is 1500/-, then the entire 1000/- will be tax-exempt as the full 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 800/- per month, you would receive tax exemption only on the 800 (actual bill amount), and the remaining 200/- will be your taxable income.
Similarly, if we differentiate the special allowance as an entertainment allowance, a concept similar to the mobile allowance is applicable.
The catch here is that the entertainment allowance should be utilized only for business purposes. Therefore, expenses like taking your client on business outings, business lunch/dinner, etc., would be included and reimbursed.
This way, you can partially save on your taxes.
I hope this information has been helpful and answered your query.
From India, Mumbai
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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. It's better to mark the salary component as Mobile Reimbursement and allocate an amount as per the hierarchy designed by the company in their policy. Let the employee claim the bill as per their entitlement. You can include the entitlement in your CTC calculation.
From India, Ahmadabad
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From India, Ahmadabad
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Dear all,
Generally, any expenditure reimbursed by the employer in the course of employment is tax-exempt. Simple payment without any such condition, for example, even a 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.
Regards.
From India, Mumbai
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Generally, any expenditure reimbursed by the employer in the course of employment is tax-exempt. Simple payment without any such condition, for example, even a 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.
Regards.
From India, Mumbai
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Is Special Allowance & Dearness Allowance is one & the same? IF no ..what’s the difference
From India, Mumbai
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From India, Mumbai
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Dearness Allowance Meaning: In India, Dearness Allowance (D.A.) is a part of a person's salary. D.A. is calculated as a percentage of the basic salary. This amount is then added to the basic salary along with the house rent allowance to get the total salary. Rates vary as per rural/urban areas, etc.
Pensioners and family pensioners are granted D.A. to offset the price rise. During reemployment under the Central or State Government, Government undertaking, Autonomous body, or Local Body, they are not eligible to draw D.A. In such cases, 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 the 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 the pension.
From India, Delhi
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Pensioners and family pensioners are granted D.A. to offset the price rise. During reemployment under the Central or State Government, Government undertaking, Autonomous body, or Local Body, they are not eligible to draw D.A. In such cases, 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 the 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 the pension.
From India, Delhi
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Hi,
If a mobile allowance (fixed) is sent to the 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 can it be paid separately to the employee's account? Please confirm.
From India, Kolkata
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If a mobile allowance (fixed) is sent to the 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 can it be paid separately to the employee's account? Please confirm.
From India, Kolkata
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