what you mean by ALLOWANCES as per income tax tax mcq

Posted on 06-05-2016        By ADMIN

what you mean by ALLOWANCES as per income tax tax mcq

Allowance is defined as a fixed quantity of money or other substance given regularly in addition to salary for meeting specific requirements of the employees. As a general rule, all allowances are to be included in the total income unless specifically exempted. Exemption in respect of following allowances is allowable to the exent mentioned against each :- 

 House Rent Allowance:- Provided that expenditure on rent is actually incurred,  exemption available shall be the least of the following : 

(i) HRA received.

 (ii) Rent paid less 10% of salary.

 (iii) 40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi) Salary here means Basic + Dearness Allowance, if dearness allowance is provided by the terms of employment. 

 Leave Travel Allowance: The amount actually incurred on performance of travel on leave to any place in India by the shortest route to that place is exempt. This is subject to a maximum of the air economy fare or AC 1st Class fare (if journey is performed by mode other than air) by such route, provided that the exemption shall be available only in respect of two journeys performed in a block of 4 calendar years. 

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