12/2/22, 6:35 PM Income Tax Department


List of benefits available to Salaried Persons*
[AY 2023-24]
S. N. Se Particulars Benefits
cti
on
A. Allowances
1. 10 House Rent Allowance (Sec. 10 Least of the following is exempt:
(1 (13A) & Rule 2A) a) Actual HRA Received
3 b) 40% of Salary (50%, if house situated in Mumba
A) i, Calcutta, Delhi or Madras)
c) Rent paid minus 10% of salary
* Salary= Basic + DA (if part of retirement benefit)
+ Turnover based Commission
Note:
  i.  Fully Taxable, if HRA is received by an emplo
yee who is living in his own house or if he doe
s not pay any rent
 ii. It is mandatory for employee to report PAN of t
he landlord to the employer if rent paid is more
than Rs. 1,00,000 [Circular No. 08 /2013 dated
10th October, 2013].
2. 10 Children Education Allowance Up to Rs. 100 per month per child up to a maximum
(1 of 2 children is exempt
4)
3. 10 Hostel Expenditure Allowance Up to Rs. 300 per month per child up to a maximum
(1 of 2 children is exempt
4)
4. 10 Transport Allowance granted to Rs. 3,200 per month granted to an employee, who is
(1 an employee to meet expenditur blind or deaf and dumb or orthopedically handicappe
4) e for the purpose of commuting d with disability of lower extremities
between place of residence and
place of duty
5. Se Transport Allowance to an empl Amount of exemption shall be lower of following:
c. oyee working in any transport b a) 70% of such allowance; or
10 usiness to meet his personal exp b) Rs. 10,000 per month.
(1 enditure during his duty perform
4) ed in the course of running of su
ch transport from one place to a
nother place provided employee
is not in receipt of daily allowan
ce.
6. 10 Conveyance Allowance granted Exempt to the extent of expenditure incurred

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(1 to meet the expenditure on conv

4) eyance in performance of duties
of an office
7. 10 Any Allowance granted to meet Exempt to the extent of expenditure incurred
(1 the cost of travel on tour or on tr
4) ansfer
8. 10 Daily Allowance to meet the or Exempt to the extent of expenditure incurred
(1 dinary daily charges incurred by
4) an employee on account of abse
nce from his normal place of dut
y
9. 10 Helper/Assistant Allowance Exempt to the extent of expenditure incurred
(1
4)
10. 10 Research Allowance granted for Exempt to the extent of expenditure incurred
(1 encouraging the academic resea
4) rch and other professional pursu
its
11. 10 Uniform Allowance Exempt to the extent of expenditure incurred
(1
4)
12. 10 Foreign allowances or perquisit Fully Exempt
(7) es paid or allowed by Governme
nt to its employees (an Indian ci
tizen) posted outside India
13. - Allowances to Judges of High C Fully Exempt.
ourt/Supreme Court (Subject to
certain conditions)
14. 10 Following allowances and perqu Fully Exempt
(4 isites given to serving Chairma
5) n/Member of UPSC is exempt fr
om tax:
a) Value of rent free official resi
dence
b) Value of conveyance facilitie
s including transport allowance
c) Sumptuary allowance
d) Leave travel concession
15. - Allowances paid by the UNO to Fully Exempt
its employees
16. 10 Allowances to Retired Chairma Exempt subject to maximum of Rs.14,000 per month
(4 n/Members of UPSC (Subject to for defraying services of an orderly and for secretaria
5) certain conditions) l assistant on contract basis.
The value of residential telephone free of cost and th
e number of free calls to the extent of 1500 per mont
h shall be exempt.
17. Se Special compensatory Allowanc Amount exempt from tax varies from Rs. 300 per mo
c. e (Hilly Areas) (Subject to certa nth to Rs. 7,000 per month.
10 in conditions and locations)
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(1
4)
18. Se Border area allowances, Remote Amount exempt from tax varies from Rs. 200 per mo
c. Locality allowance or Disturbed nth to Rs. 1,300 per month.
10 Area allowance or Difficult Are
(1 a Allowance (Subject to certain
4) conditions and locations)
19. Se Tribal area allowance given in Rs. 200 per month
c. (a) Madhya Pradesh (b) Tamil N
10 adu (c) Uttar Pradesh (d) Karnat
(1 aka (e) Tripura (f) Assam (g) W
4) est Bengal (h) Bihar (i) Odisha
20. Se Compensatory Field Area Allo Rs. 2,600 per month
c. wance. If this exemption is take
10 n, employee cannot claim any e
(1 xemption in respect of border ar
4) ea allowance (Subject to certain
conditions and locations)
21. Se Compensatory Modified Area A Rs. 1,000 per month
c. llowance. If this exemption is ta
10 ken, employee cannot claim any
(1 exemption in respect of border a
4) rea allowance (Subject to certai
n conditions and locations)
22. Se Counter Insurgency Allowance Rs. 3,900 per month
c. granted to members of Armed F
10 orces operating in areas away fr
(1 om their permanent locations. If
4) this exemption is taken, employ
ee cannot claim any exemption i
n respect of border area allowan
ce (Subject to certain conditions
and locations)
23. Se Underground Allowance is gran Up to Rs. 800 per month
c. ted to employees working in un
10 congenial, unnatural climate in
(1 underground mines
4)
24. Se High Altitude Allowance is gran a) Up to Rs. 1,060 per month (for altitude of 9,000 to
c. ted to armed forces operating in 15,000 feet)
10 high altitude areas (Subject to c b) Up to Rs. 1,600 per month (for altitude above 15,0
(1 ertain conditions and locations) 00 feet)
4)
25. Se Highly active field area allowan Up to Rs. 4,200 per month
c. ce granted to members of armed
10 forces (Subject to certain conditi
(1 ons and locations)
4)
26. Se Island Duty Allowance granted t Up to Rs. 3,250 per month
c. o members of armed forces in A
10 ndaman and Nicobar and Laksh
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(1 adweep group of Island (Subject

4) to certain conditions and locatio
ns)
B. Perquisites
1. 17 Rent free unfurnished accommo License Fees determined in accordance with rules fra
(2) dation provided to Central and S med by Government for allotment of houses shall be
(i)/ tate Government employees deemed to be the taxable value of perquisites.
(ii)
rea
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(1)
2. 17 Unfurnished rent free accommo Taxable value of perquisites
(2) dation provided to other employ A. If House Property is owned by the employer:
(i)/ ees i. 15% of salary, if population of city where accom
(ii)
modation is provided exceeds 25 lakhs as per 2
rea 001 census
d
ii. 10% of salary, if population of city where accom
wi modation is provided exceeds 10 lakhs but doe
th
s not exceed 25 lakhs as per 2001 census
Ru
iii. 7.5% of salary, if accommodation is provided in
le
any other city
3
(1) B. If House Property is taken on lease or rent by the
employer, the perquisite value shall be :
i. Lease rent paid or payable by the employer or 15%
of the salary, whichever is lower
*Salary includes:
a) Basic Pay
b) Dearness Allowance (only to the extent it forms
part of retirement benefit salary)
c) Bonus
d) Commission
e) All other allowances (only taxable portion)
f) Any monetary payment which is chargeable to ta
x
But does not include
i. Value of any perquisite [under section 17(2)]
ii. Employer’s contribution to PF
iii. Benefits received at the time of retirement like g
ratuity, pension etc.
Note:
1) Rent free accommodation is not chargeable to ta
x if provided to an employee working at minin
g site or an on-shore oil exploration site, etc.,
—
(i) which is being of temporary nature (subje
ct to conditions)
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(ii) which is located in remote area.

2) Rent free accommodation if provided to High C
ourt or Supreme Court Judges, Union Minister
s, Leader of Opposition in Parliament, an offici
al in Parliament and Serving Chairman and me
mbers of UPSC is Tax Free Perquisites.
3) The value so determined shall be reduced by the
amount of rent, if any, paid by the employee.
4) If employee is transferred and retain property at
both the places, the taxable value of perquisites
for initial period of 90 days shall be determined
with reference to only one accommodation (at t
he option of the assessee). The other one will b
e tax free. However after 90 days, taxable valu
e of perquisites shall be charged with reference
to both the accommodations.
3. 17 Rent free furnished accommoda Taxable value of perquisites
(2) tion a) Find out taxable value of perquisite assuming acco
(i)/ mmodation to be provided to the employee is unfurni
(ii) shed
rea b) Add: 10% of original cost of furniture and fixtures
d (if these are owned by the employer) or actual higher
wi charges paid or payable (if these are taken on rent by
th the employer).
Ru Note: The value so determined shall be reduced by th
le e amount of rent, if any, paid by the employee
3
(1)
4. 17 A furnished accommodation in Taxable value of perquisites
(2) a Hotel Value of perquisite shall be lower of following:
(i)/
a) Actual charges paid or payable by the employer t
(ii) o such hotel
rea
b) 24% of salary
d
wi Note: Hotel accommodation will not be chargeable t
th o tax if :
Ru a) It is provided for a total period not exceeding in
le aggregate 15 days in the financial year; and
3 b) Such accommodation in hotel is provided on em
(1) ployee’s transfer from one place to another plac
e.

5. 17 Any sum paid by employer in re Fully Taxable

(2) spect of any obligation of an em
(i ployee
v)
5A. 17 Contribution made to the accou To the extent it exceeds Rs. 7,50,000
(2) nt of the assessee by the employ
(vi er––
i) (a) in a recognised provident fu
nd;
(b) in the scheme referred to in s
ection 80CCD(1); and

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(c) in an approved superannuati

on fund
5B. 17 Any annual accretion by way of To the extent it relates to the employer’s contribution
(2) interest, dividend or any other a which is included in total income
(i mount of similar nature during t
v) he previous year to the balance
at the credit of the fund or sche
me
5C. 17 Motor Car / Other Conveyance Taxable value of perquisites (See Note 1 below)
(2)
(vi
ii)
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(2)
6. 17 Services of a domestic servant i Taxable value of perquisite shall be salary paid or pa
(2) ncluding sweeper, gardener, wat yable by the employer for such services less any amo
(vi chmen or personal attendant unt recovered from the employee.
ii) (Taxable in case of specified em
rea ployee only [See Note 4])
d
wi
th
Ru
le
3
(3)
7. 17 Supply of gas, electricity or wat Taxable value of perquisites:
(2) er for household purposes 1. Manufacturing cost per unit incurred by the empl
(vi oyer., if provided from resources owned by the
ii) employer;
rea 2. Amount paid by the employer, if purchased by th
d e employer from outside agency
wi
Note:
th
Ru  i.  Any amount recovered from the employee shall
le be deducted from the taxable value of perquisit
3 e.
(4)  ii.  Taxable in case of specified employees only [Se
e note 4]
8. 17 Education Facilities Taxable value of perquisites (See Note 2 below)
(2)
(vi
ii)
rea
d
wi
th
Ru
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le
3
(5)
9. 17 Transport facilities provided by Value at which services are offered by the employer t
(2) the employer engaged in carriag o the public less amount recovered from the employe
(vi e of passenger or goods (except e shall be a taxable perquisite
ii) Airlines or Railways)
rea (Taxable in case of specified em
d ployee only [See Note 4])
wi
th
Ru
le
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(6)
10. 17 Amount payable by the employe Fully Taxable
(2) r to effect an insurance on life of
(v) employee or to effect a contract
for an annuity
11. 17 ESOP/ Sweat Equity Shares Taxable value of perquisites
(2) Fair Market value of shares or securities on the date
(v of exercise of option by the assessee less amount rec
i) r overed from the employee in respect of such shares s
ea hall be the taxable value of perquisites.
d Fair Market Value shall be determined as follows:
wi
th  a) In case of listed Shares: Average of opening and
Ru closing price as on date of exercise of option (S
le ubject to certain conditions and circumstances)
3  b) In case of unlisted shares/ security other than eq
(8)/ uity shares: Value determined by a Merchant B
3 anker as on date of exercise of option or an earl
(9) ier date, not being a date which is more than 18
0 days earlier than the date of exercise of the o
ption.
Note:
The Finance Act, 2020 has deferred the taxation of p
erquisite in case of start-ups from date of allotment t
o the earliest of the following three dates:
1. Expiry of 48 months from the end of the relevant
assessment year;
2. Sale of such shares by the employees;
3. Date on which employee ceases to be employee
of the start-up.
The eligible start-up shall accordingly, be required to
deposit tax with the government within 14 days of th
e happening of any of the above events (whichever is
earlier).
However, 17(2)(vi) has not been amended, t
hus the income shall be computed in the year in whic
h shares are allotted but tax shall be paid in subseque
nt year.
12. 17 Employer’s contribution toward Taxable in the hands of employee to the extent such c
(2) s: ontribution exceed Rs.7,50,000

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(vi  a)  recognised provided fund

i)  b)  NPS (Section 80CCD(1))
 c)  Approved Superannuation
fund
13. 17 Interest free loan or Loan at con Interest free loan or loan at concessional rate of inter
(2) cessional rate of interest est given by an employer to the employee (or any me
(vi mber of his household) is a perquisite chargeable to t
ii) ax in the hands of all employees on following basis:
rea  1. Find out the ‘maximum outstanding monthly bal
d ance’ (i.e. the aggregate outstanding balance fo
wi r each loan as on the last day of each month);
th
 2. Find out rate of interest charged by the SBI as o
Ru
n the first day of relevant previous year in resp
le ect of loan for the same purpose advanced by i
3 t;
(7)
(i)  3. Calculate interest for each month of the previou
s year on the outstanding amount (mentioned i
n point 1) at the rate of interest (given in point
2)
 4. Interest actually recovered, if any, from employ
ee
 5. The balance amount (point 3-point 4) is taxable
value of perquisite
Nothing is taxable if:
 a) Loan in aggregate does not exceed Rs 20,000
 b) Loan is provided for treatment of specified dise
ases ( Rule 3A) like neurological diseases, Can
cer, AIDS, Chronic renal failure, Hemophilia (s
pecified diseases). However, exemption is not a
pplicable to so much of the loan as has been rei
mbursed to the employee under any medical in
surance scheme.
14. 17 Facility of travelling, touring an a) Perquisite value taxable in the hands of employe
(2) d accommodation availed of by e shall be expenditure incurred by the employer
(vi the employee or any member of less amount recovered from employee.
ii) his household for any holiday b) Where such facility is maintained by the employ
rea er, and is not available uniformly to all employ
d ees, the value of benefit shall be taken to be the
wi value at which such facilities are offered by oth
th er agencies to the public less amount recovered
Ru from employee.
le
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(7)
(ii)
15. 17 Free food and beverages provid 1) Fully Taxable: Free meals in excess of Rs. 50 pe
(2) ed to the employee r meal less amount paid by the employee shall
(vi be a taxable perquisite
ii) 2) Exempt from tax: Following free meals shall be
rea exempt from tax
d  a) Food and non-alcoholic beverages provid
wi ed during working hours in remote area
th or in an offshore installation;
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Ru  b) Tea, Coffee or Non-Alcoholic beverages

le and Snacks during working hours are ta
3 x free perquisites;
(7)  c) Food in office premises or through non-tr
(ii ansferable paid vouchers usable only at
i) eating joints provided by an employer is
not taxable, if cost to the employer is R
s. 50(or less) per meal.
16. 17 Gift or Voucher or Coupon on c a) Gifts in cash or convertible into money (like gift
(2) eremonial occasions or otherwis cheque) are fully taxable
(vi e provided to the employee b) Gift in kind up to Rs.5,000 in aggregate per annu
ii) m would be exempt, beyond which it would be
rea taxable.
d
wi
th
Ru
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(7)
(i
v)
17. 17 Credit Card a) Expenditure incurred by the employer in respect
(2) of credit card used by the employee or any me
(vi mber of his household less amount recovered fr
ii) om the employee is a taxable perquisite
rea b) Expenses incurred for official purposes shall not
d be a taxable perquisite provided complete detai
wi ls in respect of such expenditure are maintained
th by the employer
Ru
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(7)
(v)
18. 17 Free Recreation/ Club Facilities a) Expenditure incurred by the employer towards a
(2) nnual or periodical fee etc. (excluding initial fe
(vi e to acquire corporate membership) less amoun
ii) t recovered from the employee is a taxable perq
rea uisite
d b) Expenses incurred on club facilities for the offici
wi al purposes are exempt from tax.
th c) Use of health club, sports and similar facilities pr
Ru ovided uniformly to all employees shall be exe
le
mpt from tax.
3
(7)
(v
i)
19. 17 Use of movable assets of the em Taxable value of perquisites
(2) ployer by the employee is a taxa a) Use of Laptops and Computers: Nil
(vi ble perquisite b) Movable asset other than Laptops, computers an
ii) d Motor Car*: 10% of original cost of the asset
rea (if asset is owned by the employer) or actual hi
d
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wi gher charges incurred by the employer (if asset

th is taken on rent) less amount recovered from e
Ru mployee.
le *See Note 1 for computation of perquisite value in ca
3 se of use of the Motor Car
(7)
(vi
i)
20. 17 Transfer of movable assets by a Taxable value of perquisites
(2) n employer to its employee a) Computers, Laptop and Electronics items: Actua
(vi l cost of asset less depreciation at 50% (using r
ii) educing balance method) for each completed y
rea ear of usage by employer less amount recovere
d d from the employee
wi
b) Motor Car: Actual cost of asset less depreciation
th at 20% (using reducing balance method) for ea
Ru ch completed year of usage by employer less a
le mount recovered from the employee
3
(7) c) Other movable assets: Actual cost of asset less d
(vi epreciation at 10% (on SLM basis) for each co
ii) mpleted year of usage by employer less amount
recovered from the employee.
21. 17 Any other benefit or amenity ex Taxable value of perquisite shall be computed on the
(2) tended by employer to employe basis of cost to the employer (under an arm’s length t
(vi e ransaction) less amount recovered from the employe
ii) e.
rea However expenses on telephones including a mobile
d phone incurred by the employer on behalf of employ
wi ee shall not be treated as taxable perquisite.
th
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(7)
(i
x)
22. 10 Tax paid by the employer on per Fully exempt
(1 quisites (not provided for by wa
0C y of monetary payments) given t
C) o employee
23. 10 Leave Travel Concession or Ass The exemption shall be limited to fare for going any
(5) istance (LTC/LTA), extended by where in India along with family twice in a block of f
an employer to an employee for our years:
going anywhere in India along i. Exemption limit where journey is performed by
with his family* Air - Air fare of economy class in the National
*Family includes spouse, childr Carrier by the shortest route or the amount spe
en and dependent brother/sister/ nt, whichever is less
parents. However, family does ii. Exemption limit where journey is performed by
n’t include more than 2 children Rail - Air-conditioned first class rail fare by the
of an Individual born on or after shortest route or the amount spent, whichever i
01-10-1998. s less
iii. Exemption limit if places of origin of journey a
nd destination are connected by rail but the jou

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rney is performed by any other mode of transp

ort - Air-conditioned first class rail fare by the
shortest route or the amount spent, whichever i
s less
iv. Exemption limit where the places of origin of jo
urney and destination are not connected by rail:
a. Where a recognized public transport syste
m exists - First Class or deluxe class far
e by the shortest route or the amount spe
nt, whichever is less
b. Where no recognized public transport syst
em exists - Air conditioned first class ra
il fare by shortest route or the amount sp
ent, whichever is less
Notes:
i. Two journeys in a block of 4 calendar years is ex
empt
ii. Taxable only in case of Specified Employees [Se
e note 4]
24. Pr Medical facilities in India 1) Expense incurred or reimbursed by the employer
ov for the medical treatment of the employee or hi
iso s family (spouse and children, dependent - pare
to nts, brothers and sisters) in any of the followin
se g hospital is not chargeable to tax in the hands
cti of the employee:
on a)  Hospital maintained by the employer.
17 b)   Hospital maintained by the Government
(2) or Local Authority or any other hospital
approved by Central Government
c)  Hospital approved by the Chief Commiss
ioner having regard to the prescribed gu
idelines for treatment of the prescribed
diseases.
2) Medical insurance premium paid or reimbursed
by the employer is not chargeable to tax.
25. Pr Medical facilities outside India Any expenditure incurred or reimbursed by the empl
ov oyer for medical treatment of the employee or his fa
iso mily member outside India is exempt to the extent of
to following (subject to certain condition):
se a) Expenses on medical treatment - exempt to the e
cti xtent permitted by RBI.
on b) Expenses on stay abroad for patient and one atte
17 ndant - exempt to the extent permitted by RBI.
(2)
c) Cost on travel of the employee or any family or
one attendant - exempt, if Gross Total Income
(before including the travel expenditure) of the
employee, does not exceed Rs. 2,00,000.
26. Pr Medical facility or reimburseme Any sum paid by the employer in respect of any expe
ov nt for COVID-19 treatment nditure actually incurred by the employee on his med
iso ical treatment or treatment of any member of his fam
to ily in respect of any illness relating to Covid-19, shal
se l not be taxable as perquisite in the hands of the empl
cti oyee. However, this benefit shall be allowed subject t
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on o certain conditions as may be notified by the Gover

17 nment in this behalf. [applicable w.e.f. Assessment Y
(2) ear 2020-21]
C. Deduction from salary

1. 16 Standard Deduction Rs. 50,000 or the amount of salary, whichever is low

(i er
a)
2. 16 Entertainment Allowance receiv Least of the following is deductible :
(ii) ed by the Government employee a) Rs 5,000
s (Fully taxable in case of other b) 1/5th of salary (excluding any allowance, benefit
employees) s or other perquisite)
c) Actual entertainment allowance received
3. 16 Employment Tax/Professional T Amount actually paid during the year  is deductible.
(ii ax. However, if professional tax is paid by the employer
i) on behalf of its employee than it is first included in t
he salary of the employee as a perquisite and then sa
me amount is allowed as deduction.
D. Retirement Benefits
a) Leave Encashment
1. 10 Encashment of unutilized earne Fully Exempt
(1 d leave at the time of retirement
0A of Government employees
A)
2. 10 Encashment of unutilized earne Least of the following shall be exempt from tax:
(1 d leave at the time of retirement a) Amount actually received
0A of other employees (not being a b) Unutilized earned leave* X Average monthly sal
A) Government employee) ary
c) 10 months Average Salary**
d) Rs. 3,00,000
*While computing unutilized earned leave, earned le
ave entitlements cannot exceed 30 days for each year
of service rendered to the current employer
**Average salary = Average Salary*** of last 10 mo
nths immediately preceding the retirement
***Salary = Basic Pay + Dearness Allowance (to the
extent it forms part of retirement benefits)+ turnover
based commission
b) Retrenchment Compensation
1. 10 Retrenchment Compensation re Least of the following shall be exempt from tax:
(1 ceived by a workman under the a) an amount calculated as per section 25F(b) of th
0 Industrial Dispute Act, 1947(Su e Industrial Disputes Act, 1947;
B) bject to certain conditions). b) Rs. 5,00,000; or
c) Amount actually received
Note:
 i. Relief under Section 89(1) is available
ii. 15 days average pay for each completed year of
continuous service or any part thereof in excess
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of 6 months is to be adopted under section 25F

(b) of the Industrial Disputes Act, 1947.
c) Gratuity
1. 10 Gratuity received by Governme Fully Exempt
(1 nt Employees (Other than emplo
0) yees of statutory corporations)
(i)
2. 10 Death -cum-Retirement Gratuity Least of following amount is exempt from tax:
(1 received by other employees wh 1. (*15/26) X Last drawn salary** X completed ye
0) o are covered under Gratuity Ac ar of service or part thereof in excess of 6 mont
(ii) t, 1972 (other than Government hs.
employee) (Subject to certain co 2. Rs. 20,00,000
nditions).
3. Gratuity actually received.
*7 days in case of employee of seasonal establishme
nt.
** Salary = Last drawn salary including DA but excl
uding any bonus, commission, HRA, overtime and a
ny other allowance, benefits or perquisite
3. 10 Death -cum-Retirement Gratuity Least of following amount is exempt from tax:
(1 received by other employees wh 1. Half month’s Average Salary* X Completed year
0) o are not covered under Gratuity s of service
(ii Act, 1972 (other than Governme 2. Rs. 20,00,000
i) nt employee) (Subject to certain
conditions). 3. Gratuity actually received.
*Average salary = Average Salary of last 10 months i
mmediately preceding the month of retirement
** Salary = Basic Pay + Dearness Allowance (to the
extent it forms part of retirement benefits)+ turnover
based commission
d) Pension
1. - Pension received from United N Fully Exempt
ation Organization by the emplo
yee of his family members
2. 10 Commuted Pension received by Fully Exempt
(1 an employee Central Governme
0 nt, State Government, Local Aut
A) hority Employees and Statutory
(i) Corporation
3. 10 Commuted Pension received by 1/3 of full value of commuted pension will be exemp
(1 other employees who also recei t from tax
0 ve gratuity
A)
(ii)
4. 10 Commuted Pension received by 1/2 of full value of commuted pension will be exemp
(1 other employees who do not rec t from tax
0 eive any gratuity
A)
(ii
i)

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5. 10 Family Pension received by the Fully Exempt

(1 family members of Armed Forc
9) es
6. 57 Family pension received by fam 33.33% of Family Pension subject to maximum of R
(ii ily members in any other case s. 15,000 shall be exempt from tax
a)
e) Voluntary Retirement
1. 10 Amount received on Voluntary Least of the following is exempt from tax:
(1 Retirement or Voluntary Separat 1) Actual amount received as per the guidelines i.e. l
0 ion (Subject to certain condition east of the following
C) s) a) 3 months salary for each completed year of servi
ces
b) Salary at the time of retirement X No. of months
of services left for retirement; or
2) Rs. 5,00,000
f) Provident Fund
1. - Employee’s Provident Fund For taxability of contribution made to various emplo
yee’s provident fund and interest arising thereon see
Note 3.
  g) National Pension System (NPS)

1. 10 National Pension System Any payment from the National Pension System Trus
(1 t to an assessee on closure of his account or on his op
2 ting out of the pension scheme referred to in section
A) 80CCD, to the extent it does not exceed 60% of the t
/1 otal amount payable to him at the time of such closur
0 e or his opting out of the scheme.
(1 Note: Partial withdrawal from the NPS shall be exem
2 pt to the extent of 25% of amount of contributions m
B) ade by the employee.
E. Arrear of Salary and relief under section 89(1)
1. 15 Arrear of salary and advance sal Taxable in the year of receipt. However relief under s
ary ection 89 is available
2. 89 Relief under Section 89 If an individual receives any portion of his salary in a
rrears or in advance or receives profits in lieu of salar
y, he can claim relief as per provisions of section 89 r
ead with rule 21A
3. 89 Relief under Section 89A Relief from taxation in income from retirement benef
A it account maintained in a notified country in accorda
nce with rule 21AAA
F. Other Benefits
1. - Lump-sum payment made gratu Fully Exempt in the hands of widow or other legal he
itously or by way of compensati irs of employee
on or otherwise to widow or oth
er legal heirs of an employee wh
o dies while still in active servic
e [Circular No. 573, dated 21-08
-1990]
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2. - Ex-gratia payment to a person Fully Exempt in the hands of individual or legal heirs
(or legal heirs) by Central or Sta
te Government, Local Authority
or Public Sector Undertaking co
nsequent upon injury to the pers
on or death of family member w
hile on duty [Circular No. 776,
dated 08-06-1999]
3. - Salary received from United Nat Fully Exempt
ion Organization [Circular No. 2
93, dated 10-02-1981]
4. 10 Salary received by foreign natio Fully Exempt if corresponding official in that foreign
(6) nal as an officials of an embass country enjoys a similar exemption
(ii) y, high commission, legation, co
nsulate or trade representation o
f a foreign state
5. 10 Remuneration received by non-r Fully exempt
(6) esident foreign citizen as an em
(v ployee of a foreign enterprise fo
i) r services rendered in India, if:
a) Foreign enterprise is not en
gaged in any trade or busi
ness in India
b) His stay in India does not e
xceed in aggregate a perio
d of 90 days in such previ
ous year
c) Such remuneration is not lia
ble to deducted from the i
ncome of employer charge
able under this Act
6. 10 Salary received by a non-reside Fully exempt
(6) nt foreign national for services r
(vi endered in connection with his e
ii) mployment on a foreign ship if
his total stay in India does not e
xceed 90 days in the previous ye
ar.
7. - Salary and allowances received Fully Exempt
by a teacher /professor from SA
ARC member state (Subject to c
ertain conditions).

Notes:
1. Motor Car (taxable only in case of specified employees [See note 4]) except when car owned by the
employee is used by him or members of his household wholly for personal purposes and for which
reimbursement is made by the employer)
S. N Circumstances Engine Capacity upto 1600 c Engine Capacity above 1600
o. c (value of perquisite ) cc (value of perquisite)
1 Motor Car is owned or hired by the employer
1.1 Where maintenances and running expenses including remuneration of the chauffeur are met o

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r reimbursed by the employer.

1.1-A If car is used wholly and ex Fully exempt subject to mainte Fully exempt subject to mainte
clusively in the performance nance of specified documents nance of specified documents
of official duties.
1.1-B If car is used exclusively for Actual amount of expenditure incurred by the employer on the r
the personal purposes of the unning and maintenance of motor car including remuneration p
employee or any member of aid by the employer to the chauffeur and increased by the amou
his household. nt representing normal wear and tear of the motor car at 10% p.
a. of the cost of vehicle less any amount charged from the empl
oyee for such use is taxable
1.1-C The motor car is used partly Rs. 1,800 per month (plus Rs. Rs. 2,400 per month (plus Rs.
in the performance of duties 900 per month, if chauffeur is 900 per month, if chauffeur is
and partly for personal purp also provided to run the motor also provided to run the motor
oses of the employee or any car) car)
member of his household.
Nothing is deductible in respect of any amount recovered from t
he employee.
1.2 Where maintenances and running expenses are met by the employee.
1.2-A If car is used wholly and ex Not a perquisite, hence, not tax Not a perquisite, hence, not tax
clusively in the performance able able
of official duties.
1.2-B If car is used exclusively for Expenditure incurred by the employer (i.e. hire charges, if car is
the personal purposes of the on rent or normal wear and tear at 10% of actual cost of the car)
employee or any member of plus salary of chauffeur if paid or payable by the employer min
his household us amount recovered from the employee.
1.2-C The motor car is used partly Rs. 600 per month (plus Rs. 90 Rs. 900 per month (plus Rs. 90
in the performance of duties 0 per month, if chauffeur is als 0 per month, if chauffeur is als
and partly for personal purp o provided to run the motor ca o provided to run the motor ca
oses of the employee or any r) r)
member of his household
Nothing is deductible in respect of any amount recovered from t
he employee.
2 Motor Car is owned by the employee
2.1 Where maintenances and running expenses including remuneration of the chauffeur are met o
r reimbursed by the employer.
2.1-A The reimbursement is for th Fully exempt subject to mainte Fully exempt subject to mainte
e use of the vehicle wholly nance of specified documents nance of specified documents
and exclusively for official
purposes
2.1-B The reimbursement is for th Actual expenditure incurred by the employer minus amount rec
e use of the vehicle exclusiv overed from the employee
ely for the personal purpose
s of the employee or any me
mber of his household
2.1-C The reimbursement is for th Actual expenditure incurred by Actual expenditure incurred by
e use of the vehicle partly fo the employer minus Rs. 1800 p the employer minus Rs. 2400 p
r official purposes and partl er month and Rs. 900 per mont er month and Rs. 900 per mont
y for personal purposes of t h if chauffer is also provided m h if chauffer is also provided m
he employee or any member inus amount recovered from e inus amount recovered from e
of his household. mployee. mployee.
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3 Where the employee owns any other automotive conveyance and actual running and ma
intenance charges are met or reimbursed by the employer
3.1 Reimbursement for the use Fully exempt subject to mainte Fully exempt subject to mainte
of the vehicle wholly and ex nance of specified documents nance of specified documents
clusively for official purpos
es;
3.2 Reimbursement for the use Actual expenditure incurred by Not Applicable
of vehicle partly for official the employer minus Rs. 900 pe
purposes and partly for pers r month minus amount recover
onal purposes of the employ ed from employee
ee.
2. Educational Facilities
Taxable only in the hands of specified employees [See note 4]
Facili Value of perquisite
ty ext
ended Provided in the school owned by the employer Provided in any other school
to
Childr Cost of such education in similar school less Rs. 1,0 Amount incurred less amount recovere
en 00 per month per child (irrespective of numbers of d from employee (an exemption of Rs.
children) less amount recovered from employee 1,000 per month per child is allowed)
Other Cost of such education in similar school less amoun Cost of such education incurred
family t recovered from employee
memb
er

2.1 Other Educational Facilities

Particulars Taxable Value of Perquisit
es
Reimbursement of school fees of children or family member of emplo Fully taxable
yees
Free educational facilities/ training of employees Fully exempt

3. Employees Provident Fund

Tax treatment in respect of contributions made to and payment from various provident funds are
summarized in the table given below:
Particulars Statutor Recognized provident Unrecognized provide Public
y provid fund nt fund provid
ent fund ent fun
d
Employers contribution t Fully Ex Exempt only to the ext Fully Exempt -
o provident fund empt ent of 12% of salary*
Deduction under section Availabl Available Not Available Availab
80C on employees contri e le
bution
Interest credited to provi Fully Exempt Exempt only to the ext Fully E Full
dent fund
ent rate of interest does xempt y E
See Note not exceed 9.5% xem
pt

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Payment received at the Fully Ex Fully Exempt (Subject Fully Taxable (except e Fully E
time of retirement or ter empt to certain conditions an mployee’s contributio xempt
mination of service d circumstances) n)

* Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits) +
turnover based commission
Payment from recognized provident fund shall be exempt in the hands of employees in following
circumstances:
a) If employee has rendered continue service with his employer (including previous employer, when
PF account is transferred to current employer) for a period of 5 years or more
b) If employee has been terminated because of certain reasons which are beyond his control (ill
health, discontinuation of business of employer, etc.)
Note:
No exemption shall be available for the interest income accrued during the previous year in the
recognised and statutory provident fund to the extent it relates to the contribution made by the
employees over Rs. 2,50,000 in the previous year.
However, if an employee is contributing to the fund but there is no contribution to such fund by the
employer, then the interest income accrued during the previous year shall be taxable to the extent it
relates to the contribution made by the employee to that fund in excess of Rs. 5,00,000 in a financial
year.
4. Specified Employee
The following employees are deemed as specified employees:
1) A director-employee
2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or
more voting power) in the employer-company
3) An employee whose monetary income* under the salary exceeds Rs. 50,000
*Monetary Income means Income chargeable under the salary but excluding perquisite value of all
non-monetary perquisites
 
 
[As amended by Finance Act, 2022]

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