6/26/2020 Income Tax Department

List of benefits available to Salaried Persons

[AY 2021-22]
S. Sec Particulars Benefits
N. tio
n
A. Allowances
1. 10 House Rent Allowance (Sec. 10(13A) Least of the following is exempt:
(13 & Rule 2A) a) Actual HRA Received
A) b) 40% of Salary (50%, if house situated in Mumb
ai, 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 empl
oyee who is living in his own house or if he d
oes not pay any rent
ii. It is mandatory for employee to report PAN of
the landlord to the employer if rent paid is mo
re than Rs. 1,00,000 [Circular No. 08 /2013 d
ated 10th October, 2013].
2. 10 Children Education Allowance Up to Rs. 100 per month per child up to a maximu
(1 m of 2 children is exempt
4)
3. 10 Hostel Expenditure Allowance Up to Rs. 300 per month per child up to a maximu
(1 m of 2 children is exempt
4)
4. 10 Transport Allowance granted to an em Rs. 3,200 per month granted to an employee, who is
(1 ployee to meet expenditure for the pur blind or deaf and dumb or orthopedically handicapp
4) pose of commuting between place of r ed with disability of lower extremities
esidence and place of duty
5. Se Transport Allowance to an employee Amount of exemption shall be lower of following:
c. 1 working in any transport business to a) 70% of such allowance; or
0(1 meet his personal expenditure during b) Rs. 10,000 per month.
4) his duty performed in the course of ru
nning of such transport from one plac
e to another place provided employee
is not in receipt of daily allowance.
6. 10 Conveyance Allowance granted to me Exempt to the extent of expenditure incurred
(1 et the expenditure on conveyance in p
4) erformance of duties of an office
7. 10 Any Allowance granted to meet the c Exempt to the extent of expenditure incurred
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(1 ost of travel on tour or on transfer

4)
8. 10 Daily Allowance to meet the ordinary Exempt to the extent of expenditure incurred
(1 daily charges incurred by an employe
4) e on account of absence from his nor
mal place of duty
9. 10 Helper/Assistant Allowance Exempt to the extent of expenditure incurred
(1
4)
1 10 Research Allowance granted for enco Exempt to the extent of expenditure incurred
0. (1 uraging the academic research and oth
4) er professional pursuits
1 10 Uniform Allowance Exempt to the extent of expenditure incurred
1. (1
4)
1 10 Foreign allowances or perquisites pai Fully Exempt
2. (7) d or allowed by Government to its em
ployees (an Indian citizen) posted out
side India
1 - Allowances to Judges of High Court/ Fully Exempt.
3. Supreme Court (Subject to certain con
ditions)
1 10 Following allowances and perquisites Fully Exempt
4. (4 given to serving Chairman/Member o
5) f UPSC is exempt from tax:
a) Value of rent free official residence
b) Value of conveyance facilities inclu
ding transport allowance
c) Sumptuary allowance
d) Leave travel concession
1 - Allowances paid by the UNO to its e Fully Exempt
5. mployees
1 10 Allowances to Retired Chairman/Me Exempt subject to maximum of Rs.14,000 per mont
6. (4 mbers of UPSC (Subject to certain co h for defraying services of an orderly and for secret
5) nditions) arial assistant on contract basis.
The value of residential telephone free of cost and t
he number of free calls to the extent of 1500 per mo
nth shall be exempt.
1 Se Special compensatory Allowance (Hil Amount exempt from tax varies from Rs. 300 per m
7. c. 1 ly Areas) (Subject to certain condition onth to Rs. 7,000 per month.
0(1 s and locations)
4)
1 Se Border area allowances, Remote Loca Amount exempt from tax varies from Rs. 200 per m
8. c. 1 lity allowance or Disturbed Area allo onth to Rs. 1,300 per month.
0(1 wance or Difficult Area Allowance (S
4) ubject to certain conditions and locati
ons)
1 Se Tribal area allowance given in (a) Ma Rs. 200 per month
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9. c. 1 dhya Pradesh (b) Tamil Nadu (c) Utta

0(1 r Pradesh (d) Karnataka (e) Tripura (f)
4) Assam (g) West Bengal (h) Bihar (i)
Orissa
2 Se Compensatory Field Area Allowance. Rs. 2,600 per month
0. c. 1 If this exemption is taken, employee c
0(1 annot claim any exemption in respect
4) of border area allowance (Subject to c
ertain conditions and locations)
2 Se Compensatory Modified Area Allowa Rs. 1,000 per month
1. c. 1 nce. If this exemption is taken, emplo
0(1 yee cannot claim any exemption in re
4) spect of border area allowance (Subje
ct to certain conditions and locations)
2 Se Counter Insurgency Allowance grante Rs. 3,900 per month
2. c. 1 d to members of Armed Forces operat
0(1 ing in areas away from their permane
4) nt locations. If this exemption is take
n, employee cannot claim any exempt
ion in respect of border area allowanc
e (Subject to certain conditions and lo
cations)
2 Se Underground Allowance is granted to Up to Rs. 800 per month
3. c. 1 employees working in uncongenial, u
0(1 nnatural climate in underground mine
4) s
2 Se High Altitude Allowance is granted to a) Up to Rs. 1,060 per month (for altitude of 9,000 t
4. c. 1 armed forces operating in high altitud o 15,000 feet)
0(1 e areas (Subject to certain conditions b) Up to Rs. 1,600 per month (for altitude above 15,
4) and locations) 000 feet)
2 Se Highly active field area allowance gra Up to Rs. 4,200 per month
5. c. 1 nted to members of armed forces (Sub
0(1 ject to certain conditions and location
4) s)
2 Se Island Duty Allowance granted to me Up to Rs. 3,250 per month
6. c. 1 mbers of armed forces in Andaman an
0(1 d Nicobar and Lakshadweep group of
4) Island (Subject to certain conditions a
nd locations)
B. Perquisites
1. 17 Rent free unfurnished accommodation License Fees determined in accordance with rules fr
(2) provided to Central and State Govern amed by Government for allotment of houses shall
(i)/ ment employees be deemed to be the taxable value of perquisites.
(ii)
rea
dw
ith
Rul
e 3
(1)

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2. 17 Unfurnished rent free accommodation Taxable value of perquisites

(2) provided to other employees A. If House Property is owned by the employer:
(i)/
i. 15% of salary, if population of city where acco
(ii) mmodation is provided exceeds 25 lakhs as p
rea er 2001 census
dw
ii. 10% of salary, if population of city where acco
ith
mmodation is provided exceeds 10 lakhs but
Rul does not exceed 25 lakhs as per 2001 census
e 3 iii. 7.5% of salary, if accommodation is provided i
(1)
n any other city
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 1
5% of the salary, whichever is lower
*Salary includes:
a) Basic Pay
b) Dearness Allowance (only to the extent it form
s part of retirement benefit salary)
c) Bonus
d) Commission
e) All other allowances (only taxable portion)
f) Any monetary payment which is chargeable to t
ax
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
gratuity, pension etc.
Note:
1) Rent free accommodation is not chargeable to t
ax if provided to an employee working at min
ing site or an on-shore oil exploration site, et
c.,—
(i) which is being of temporary nature (subj
ect to conditions)
(ii) which is located in remote area.
2) Rent free accommodation if provided to High
Court or Supreme Court Judges, Union Minist
ers, Leader of Opposition in Parliament, an of
ficial in Parliament and Serving Chairman an
d members of UPSC is Tax Free Perquisites.
3) The value so determined shall be reduced by th
e amount of rent, if any, paid by the employe
e.
4) If employee is transferred and retain property at
both the places, the taxable value of perquisite
s for initial period of 90 days shall be determi
ned with reference to only one accommodatio
n (at the option of the assessee). The other on
e will be tax free. However after 90 days, taxa
ble value of perquisites shall be charged with
reference to both the accommodations.

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3. 17 Rent free furnished accommodation Taxable value of perquisites

(2) a) Find out taxable value of perquisite assuming acc
(i)/ ommodation to be provided to the employee is unfu
(ii) rnished
rea b) Add: 10% of original cost of furniture and fixture
dw s (if these are owned by the employer) or actual hig
ith her charges paid or payable (if these are taken on re
Rul nt by the employer).
e 3 Note: The value so determined shall be reduced by t
(1) he amount of rent, if any, paid by the employee
4. 17 A furnished accommodation in a Hote Taxable value of perquisites
(2) l Value of perquisite shall be lower of following:
(i)/
a) Actual charges paid or payable by the employer
(ii)
to such hotel
rea
b) 24% of salary
dw
ith Note: Hotel accommodation will not be chargeable
to tax if :
Rul
e 3 a) It is provided for a total period not exceeding in
(1) aggregate 15 days in the financial year; and
b) Such accommodation in hotel is provided on e
mployee’s transfer from one place to another
place.
5. 17 Any sum paid by employer in respect Fully Taxable
(2) of any obligation of an employee
(iv)
5 17 Contribution made to the account of t To the extent it exceeds Rs. 7,50,000
A. (2) he assessee by the employer––
(vi (a) in a recognised provident fund;
i) (b) in the scheme referred to in sectio
n 80CCD(1); and
(c) in an approved superannuation fun
d
5 17 Any annual accretion by way of intere To the extent it relates to the employer’s contributio
B. (2) st, dividend or any other amount of si n which is included in total income
(iv) milar nature during the previous year
to the balance at the credit of the fund
or scheme
5 17 Motor Car / Other Conveyance Taxable value of perquisites (See Note 1 below)
C. (2)
(vii
i)
rea
dw
ith
Rul
e 3
(2)
6. 17 Services of a domestic servant includi Taxable value of perquisite shall be salary paid or p
(2) ng sweeper, gardener, watchmen or pe ayable by the employer for such services less any a
(vii rsonal attendant mount recovered from the employee.
i) (Taxable in case of specified employe
e only [See Note 4])
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rea
dw
ith
Rul
e 3
(3)
7. 17 Supply of gas, electricity or water for Taxable value of perquisites:
(2) household purposes 1. Manufacturing cost per unit incurred by the em
(vii ployer., if provided from resources owned by
i) the employer;
rea 2. Amount paid by the employer, if purchased by t
dw he employer from outside agency
ith Note:
Rul
e 3 i. Any amount recovered from the employee shal
(4) l be deducted from the taxable value of perqui
site.
ii. Taxable in case of specified employees only [
See note 4]
8. 17 Education Facilities Taxable value of perquisites (See Note 2 below)
(2)
(vii
i)
rea
dw
ith
Rul
e 3
(5)
9. 17 Transport facilities provided by the e Value at which services are offered by the employer
(2) mployer engaged in carriage of passe to the public less amount recovered from the emplo
(vii nger or goods (except Airlines or Rail yee shall be a taxable perquisite
i) ways)
rea (Taxable in case of specified employe
dw e only [See Note 4])
ith
Rul
e 3
(6)
1 17 Amount payable by the employer to e Fully Taxable
0. (2) ffect an insurance on life of employee
(v) or to effect a contract for an annuity
1 17 ESOP/ Sweat Equity Shares Taxable value of perquisites
1. (2) Fair Market value of shares or securities on the date
(vi) of exercise of option by the assessee less amount re
rea covered from the employee in respect of such share
dw s shall be the taxable value of perquisites.
ith Fair Market Value shall be determined as follows:
Rul
e 3 a) In case of listed Shares: Average of opening an
(8)/ d closing price as on date of exercise of optio
3 n (Subject to certain conditions and circumsta
(9) nces)

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b) In case of unlisted shares/ security other than e

quity shares: Value determined by a Merchant
Banker as on date of exercise of option or an
earlier date, not being a date which is more th
an 180 days earlier than the date of exercise o
f the option.
Note:
The Finance Act, 2020 has deferred the taxation of
perquisite in case of start-ups from date of allotment
to the earliest of the following three dates:
1. Expiry of 48 months from the end of the releva
nt 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 t
o deposit tax with the government within 14 days of
the happening of any of the above events (whicheve
r is earlier). However, 17(2)(vi) has not been amend
ed, thus the income shall be computed in the year in
which shares are allotted but tax shall be paid in sub
sequent year.
1 17 Employer’s contribution towards supe Taxable in the hands of employee to the extent such
2. (2) rannuation fund contribution exceed Rs.1,50,000
(vi
i)
1 17 Interest free loan or Loan at concessio Interest free loan or loan at concessional rate of inte
3. (2) nal rate of interest rest given by an employer to the employee (or any
(vii member of his household) is a perquisite chargeable
i) r to tax in the hands of all employees on following ba
ead sis:
wit 1. Find out the ‘maximum outstanding monthly b
hR alance’ (i.e. the aggregate outstanding balance
ule for each loan as on the last day of each mont
3 h);
(7) 2. Find out rate of interest charged by the SBI as
(i) on the first day of relevant previous year in re
spect of loan for the same purpose advanced b
y it;
3. Calculate interest for each month of the previo
us year on the outstanding amount (mentioned
in point 1) at the rate of interest (given in poin
t 2)
4. Interest actually recovered, if any, from emplo
yee
5. The balance amount (point 3-point 4) is taxabl
e 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 dis
eases ( Rule 3A) like neurological diseases, C
ancer, AIDS, Chronic renal failure, Hemophili
a (specified diseases). However, exemption is
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not applicable to so much of the loan as has b

een reimbursed to the employee under any me
dical insurance scheme.
1 17 Facility of travelling, touring and acc a) Perquisite value taxable in the hands of employ
4. (2) ommodation availed of by the employ ee shall be expenditure incurred by the emplo
(vii ee or any member of his household fo yer less amount recovered from employee.
i) r r any holiday b) Where such facility is maintained by the emplo
ead yer, and is not available uniformly to all empl
wit oyees, the value of benefit shall be taken to be
hR the value at which such facilities are offered b
ule y other agencies to the public less amount rec
3 overed from employee.
(7)
(ii)
1 17 Free food and beverages provided to t 1) Fully Taxable: Free meals in excess of Rs. 50 p
5. (2) he employee er meal less amount paid by the employee sha
(vii ll be a taxable perquisite
i) r 2) Exempt from tax: Following free meals shall be
ead exempt from tax
wit
a) Food and non-alcoholic beverages provi
hR ded during working hours in remote ar
ule ea or in an offshore installation;
3
(7) b) Tea, Coffee or Non-Alcoholic beverages
(iii) and Snacks during working hours are t
ax free perquisites;
c) Food in office premises or through non-t
ransferable paid vouchers usable only
at eating joints provided by an employ
er is not taxable, if cost to the employe
r is Rs. 50(or less) per meal.
1 17 Gift or Voucher or Coupon on ceremo a) Gifts in cash or convertible into money (like gif
6. (2) nial occasions or otherwise provided t t cheque) are fully taxable
(vii o the employee b) Gift in kind up to Rs.5,000 in aggregate per ann
i) r um would be exempt, beyond which it would
ead be taxable.
wit
hR
ule
3
(7)
(iv)
1 17 Credit Card a) Expenditure incurred by the employer in respec
7. (2) t of credit card used by the employee or any
(vii member of his household less amount recover
i) r ed from the employee is a taxable perquisite
ead b) Expenses incurred for official purposes shall no
wit t be a taxable perquisite provided complete de
hR tails in respect of such expenditure are mainta
ule ined by the employer
3
(7)
(v)
1 17 Free Recreation/ Club Facilities a) Expenditure incurred by the employer towards
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8. (2) annual or periodical fee etc. (excluding initial

(vii fee to acquire corporate membership) less am
i) r ount recovered from the employee is a taxable
ead perquisite
wit b) Expenses incurred on club facilities for the offi
hR cial purposes are exempt from tax.
ule
c) Use of health club, sports and similar facilities
3 provided uniformly to all employees shall be
(7) exempt from tax.
(vi)
1 17 Use of movable assets of the employe Taxable value of perquisites
9. (2) r by the employee is a taxable perquis a) Use of Laptops and Computers: Nil
(vii ite b) Movable asset other than Laptops, computers a
i) r nd Motor Car*: 10% of original cost of the as
ead set (if asset is owned by the employer) or actu
wit
al higher charges incurred by the employer (if
hR
asset is taken on rent) less amount recovered f
ule rom employee.
3
(7) *See Note 1 for computation of perquisite value in c
(vi ase of use of the Motor Car
i)
2 17 Transfer of movable assets by an emp Taxable value of perquisites
0. (2) loyer to its employee a) Computers, Laptop and Electronics items: Actu
(vii al cost of asset less depreciation at 50% (usin
i) r g reducing balance method) for each complete
ead d year of usage by employer less amount reco
wit vered from the employee
hR b) Motor Car: Actual cost of asset less depreciatio
ule n at 20% (using reducing balance method) for
3
each completed year of usage by employer les
(7)
s amount recovered from the employee
(vii
i) c) Other movable assets: Actual cost of asset less
depreciation at 10% (on SLM basis) for each
completed year of usage by employer less am
ount recovered from the employee.
2 17 Any other benefit or amenity extende Taxable value of perquisite shall be computed on th
1. (2) d by employer to employee e basis of cost to the employer (under an arm’s lengt
(vii h transaction) less amount recovered from the empl
i) r oyee.
ead However expenses on telephones including a mobil
wit e phone incurred by the employer on behalf of empl
hR oyee shall not be treated as taxable perquisite.
ule
3
(7)
(ix)
2 10 Tax paid by the employer on perquisit Fully exempt
2. (10 es (not provided for by way of moneta
C ry payments) given to employee
C)
2 10 Leave Travel Concession or Assistanc The exemption shall be limited to fare for going any
3. (5) e (LTC/LTA), extended by an employ where in India along with family twice in a block of

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er to an employee for going anywhere four years:

in India along with his family* i. Exemption limit where journey is performed by
*Family includes spouse, children and Air - Air fare of economy class in the Nationa
dependent brother/sister/parents. How l Carrier by the shortest route or the amount s
ever, family doesn’t include more tha pent, whichever is less
n 2 children of an Individual born on ii. Exemption limit where journey is performed by
or after 01-10-1998. Rail - Air-conditioned first class rail fare by t
he shortest route or the amount spent, whiche
ver is less
iii. Exemption limit if places of origin of journey
and destination are connected by rail but the j
ourney is performed by any other mode of tra
nsport - Air-conditioned first class rail fare by
the shortest route or the amount spent, whiche
ver is less
iv. Exemption limit where the places of origin of j
ourney and destination are not connected by r
ail:
a. Where a recognized public transport syst
em exists - First Class or deluxe class f
are by the shortest route or the amount
spent, whichever is less
b. Where no recognized public transport sy
stem exists - Air conditioned first class
rail fare by shortest route or the amoun
t spent, whichever is less
Notes:
i. Two journeys in a block of 4 calendar years is e
xempt
ii. Taxable only in case of Specified Employees [S
ee note 4]
2 Pro Medical facilities in India 1) Expense incurred or reimbursed by the employ
4. vis er for the medical treatment of the employee o
o to r his family (spouse and children, dependent -
sect parents, brothers and sisters) in any of the foll
ion owing hospital is not chargeable to tax in the
17 hands of the employee:
(2) a) Hospital maintained by the employer.
b) Hospital maintained by the Government
or Local Authority or any other hospita
l approved by Central Government
c) Hospital approved by the Chief Commis
sioner having regard to the prescribed
guidelines for treatment of the prescrib
ed diseases.
2) Medical insurance premium paid or reimbursed
by the employer is not chargeable to tax.
2 Pro Medical facilities outside India Any expenditure incurred or reimbursed by the emp
5. vis loyer for medical treatment of the employee or his f
o to amily member outside India is exempt to the extent
sect of following (subject to certain condition):
ion a) Expenses on medical treatment - exempt to the
extent permitted by RBI.
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17 b) Expenses on stay abroad for patient and one att

(2) endant - exempt to the extent permitted by RB
I.
c) Cost on travel of the employee or any family or
one attendant - exempt, if Gross Total Income
(before including the travel expenditure) of th
e employee, does not exceed Rs. 2,00,000.
C. Deduction from salary

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

(ia) wer
2. 16 Entertainment Allowance received by Least of the following is deductible :
(ii) the Government employees (Fully tax a) Rs 5,000
able in case of other employees) b) 1/5th of salary (excluding any allowance, benef
its or other perquisite)
c) Actual entertainment allowance received
3. 16 Employment Tax/Professional Tax. Amount actually paid during the year is deductible.
(iii) However, if professional tax is paid by the employe
r on behalf of its employee than it is first included i
n the salary of the employee as a perquisite and then
same amount is allowed as deduction.
D. Retirement Benefits
a) Leave Encashment
1. 10 Encashment of unutilized earned leav Fully Exempt
(10 e at the time of retirement of Govern
A ment employees
A)
2. 10 Encashment of unutilized earned leav Least of the following shall be exempt from tax:
(10 e at the time of retirement of other em a) Amount actually received
A ployees (not being a Government emp b) Unutilized earned leave* X Average monthly s
A) loyee)
alary
c) 10 months Average Salary**
d) Rs. 3,00,000
*While computing unutilized earned leave, earned l
eave entitlements cannot exceed 30 days for each ye
ar of service rendered to the current employer
**Average salary = Average Salary*** of last 10 m
onths immediately preceding the retirement
***Salary = Basic Pay + Dearness Allowance (to th
e extent it forms part of retirement benefits)+ turno
ver based commission
b) Retrenchment Compensation
1. 10 Retrenchment Compensation received Least of the following shall be exempt from tax:
(10 by a workman under the Industrial Di a) an amount calculated as per section 25F(b) of t
B) spute Act, 1947(Subject to certain con he Industrial Disputes Act, 1947;
ditions).
b) Rs. 5,00,000; or
c) Amount actually received
Note:

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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 exce
ss of 6 months is to be adopted under section
25F(b) of the Industrial Disputes Act, 1947.
c) Gratuity
1. 10 Gratuity received by Government Em Fully Exempt
(1 ployees (Other than employees of stat
0) utory corporations)
(i)
2. 10 Death -cum-Retirement Gratuity recei Least of following amount is exempt from tax:
(1 ved by other employees who are cove 1. (*15/26) X Last drawn salary** X completed y
0)(i red under Gratuity Act, 1972 (other th ear of service or part thereof in excess of 6 m
i) an Government employee) (Subject to onths.
certain conditions).
2. Rs. 20,00,000
3. Gratuity actually received.
*7 days in case of employee of seasonal establishm
ent.
** Salary = Last drawn salary including DA but exc
luding any bonus, commission, HRA, overtime and
any other allowance, benefits or perquisite
3. 10 Death -cum-Retirement Gratuity recei Least of following amount is exempt from tax:
(1 ved by other employees who are not c 1. Half month’s Average Salary* X Completed ye
0)(i overed under Gratuity Act, 1972 (othe ars of service
ii) r than Government employee) (Subjec 2. Rs. 20,00,000
t to certain conditions).
3. Gratuity actually received.
*Average salary = Average Salary of last 10 months
immediately preceding the month of retirement
** Salary = Basic Pay + Dearness Allowance (to th
e extent it forms part of retirement benefits)+ turno
ver based commission
d) Pension
1. - Pension received from United Nation Fully Exempt
Organization by the employee of his f
amily members
2. 10 Commuted Pension received by an e Fully Exempt
(10 mployee Central Government, State G
A) overnment, Local Authority Employe
(i) es and Statutory Corporation
3. 10 Commuted Pension received by other 1/3 of full value of commuted pension will be exem
(10 employees who also receive gratuity pt from tax
A)
(ii)
4. 10 Commuted Pension received by other 1/2 of full value of commuted pension will be exem
(10 employees who do not receive any gr pt from tax
A) atuity
(iii)
5. 10 Family Pension received by the famil Fully Exempt
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(1 y members of Armed Forces

9)
6. 57 Family pension received by family m 33.33% of Family Pension subject to maximum of
(ii embers in any other case Rs. 15,000 shall be exempt from tax
a)
e) Voluntary Retirement
1. 10 Amount received on Voluntary Retire Least of the following is exempt from tax:
(10 ment or Voluntary Separation (Subject 1) Actual amount received as per the guidelines i.e.
C) to certain conditions) least of the following
a) 3 months salary for each completed year of ser
vices
b) Salary at the time of retirement X No. of month
s 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 empl
oyee’s provident fund and interest arising thereon se
e Note 3.
g) National Pension System (NPS)

1. 10 National Pension System Any payment from the National Pension System Tr
(12 ust to an assessee on closure of his account or on hi
A)/ s opting out of the pension scheme referred to in sec
10 tion 80CCD, to the extent it does not exceed 60% of
(12 the total amount payable to him at the time of such
B) closure or his opting out of the scheme.
Note: Partial withdrawal from the NPS shall be exe
mpt to the extent of 25% of amount of contributions
made by the employee.
E. Arrear of Salary and relief under section 89(1)
1. 15 Arrear of salary and advance salary Taxable in the year of receipt. However relief under
section 89 is available
2. 89 Relief under Section 89 If an individual receives any portion of his salary in
arrears or in advance or receives profits in lieu of sa
lary, he can claim relief as per provisions of section
89 read with rule 21A
F. Other Benefits
1. - Lump-sum payment made gratuitousl Fully Exempt in the hands of widow or other legal
y or by way of compensation or other heirs of employee
wise to widow or other legal heirs of
an employee who dies while still in ac
tive service [Circular No. 573, dated 2
1-08-1990]
2. - Ex-gratia payment to a person (or leg Fully Exempt in the hands of individual or legal hei
al heirs) by Central or State Governm rs
ent, Local Authority or Public Sector
Undertaking consequent upon injury t
o the person or death of family memb
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er while on duty [Circular No. 776, da

ted 08-06-1999]
3. - Salary received from United Nation O Fully Exempt
rganization [Circular No. 293, dated 1
0-02-1981]
4. 10 Salary received by foreign national as Fully Exempt if corresponding official in that foreig
(6) an officials of an embassy, high com n country enjoys a similar exemption
(ii) mission, legation, consulate or trade r
epresentation of a foreign state
5. 10 Remuneration received by non-reside Fully exempt
(6) nt foreign citizen as an employee of a
(vi) foreign enterprise for services rendere
d in India, if:
a) Foreign enterprise is not engaged
in any trade or business in India
b) His stay in India does not exceed
in aggregate a period of 90 days
in such previous year
c) Such remuneration is not liable to
deducted from the income of e
mployer chargeable under this
Act
6. 10 Salary received by a non-resident fore Fully exempt
(6) ign national for services rendered in c
(vii onnection with his employment on a f
i) oreign ship if his total stay in India do
es not exceed 90 days in the previous
year.
7. - Salary and allowances received by a t Fully Exempt
eacher /professor from SAARC mem
ber state (Subject to certain condition
s).

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
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.

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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.
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
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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 Statutory Recognized provident fu Unrecognized pro Public p
provident nd vident fund rovident
fund fund
Employers contribution to p Fully Exe Exempt only to the extent Fully Exempt -
rovident fund mpt of 12% of salary*
Deduction under section 80 Available Available Not Available Available
C on employees contributio
n
Interest credited to providen Fully Exe Exempt only to the extent Fully Exempt Fully Ex
t fund mpt rate of interest does not ex empt
ceed 9.5%
Payment received at the tim Fully Exe Fully Exempt (Subject to Fully Taxable (exce Fully Ex
e of retirement or terminatio mpt certain conditions and circ pt employee’s contr empt
n of service umstances) ibution)

* 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

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b) If employee has been terminated because of certain reasons which are beyond his control (ill
health, discontinuation of business of employer, etc.)
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, 2020]

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