except salaryone has many components CTC, these are different allowance That a person is entitled to receive conveyance allowance, traveling fee allowance, mobile reimbursement etc. Allowances received from your employer will be exempt from income tax if spent in discharge of fees and bills are deposited for the same.

If the bill is not deposited or if not spent in the discharge of official duty, the amount received will be taxable in the hands of the employee.

If such allowances received by an employee are taxed, then TDS will also be applicable on them. The TDS rate applicable on allowances will depend on the income tax regime chosen by the salaried employee. A person can continue with the old tax regime and claim tax exemption and tax deduction, Alternatively, he has the option to choose the new income tax regime and skip 70 tax exemptions and deductions.

Abhishek Soni, CEO, Tax2win.in – an ITR filing website, says, “Under Income Tax laws, any allowances paid to employees wholly, compulsorily, and exclusively for the discharge of official duty are taxed. is exempted from tax if such expenditure is actually incurred by an employee. Tax-exemption is given under section 10(14)i of the Income-tax Act, 1961.”

“In order to avail tax-exemption on allowances received for performing official duty, there are two things that one must keep in mind. Firstly, an employee must ensure that the bills relating to conveyance, tour duty, etc., are sent to the employer. Secondly, expenditure should be made in lieu of performance of official duties. If the expenditure is not made in lieu of performance of official duties, the expenditure will become taxable,” says Soni.

Thus, to claim Tax exemptionIt is important for employees to maintain bills. Although an individual is not required to submit a bill when filing an income tax return, however, you may need to submit proof of claiming tax exemption if the Income Tax Department sends you a tax notice.

ITR. claim tax exemption in

Note that an individual is required to mention the tax exemption claimed while filing ITR. Existing ITR forms ask taxpayers to provide details of allowances and other benefits provided by the employer.

Soni says, “If the allowances received by an employee are tax-exempt, then such amount will be recorded under the head ‘exempt income’ in the ITR form. A person needs to claim exemption under section 10(14) Income Tax Act.”

To know the actual tax-exempt amount received by an employee, one can check his Part-B of Form 16.