Tax exemption under "living allowances"

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2015 Hi,

I work with a software organization, I will be sent to Mexico for a short-stray ( 5 -7 months). I will continue to get my Indian Salary , for which TDS will be deducted. However, I'll be getting some 'living allowance' during my stay:

Further, I understand that under section 10(14) of the Indian Income Tax Act, 'living allowance' will be tax exempted. However, I've following queries considering this scenario:

1. Source of "living allowance": What if the "living allowances" are transferred to my Mexico Account by US based subsidiary of Indian Organization I'm employed with, Would still "living allowances" be considered as tax exempted?

2. Exemption Amount: While filing income tax in India, do I need to mention complete amount transferred under "living allowances" or only the amount which is unspent ans transferred to Indian Bank?
For Instance: If USD 2000 given as "living allowances" and USD 1000 got spent and I transferred USD 1000 to my Indian Bank, what is amount I file for tax exemption?

3. Stay Period: As per Indian Financial year 2015-16, I may stay more than 180 days in Mexico, Will this has any bearing on my tax calculation? If yes, please explain how the tax will will calculated under such scenarios ( above 180 days and below 180 days)

Request you to please provide clarifications to the above stated queries. Let me know if you require any additional information.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 June 2015 1 Living allowance is exempted if you are on temporary transfer.
2 Un spent living expenses is taxable.
3 If you stay more than 182 days in Mexico your entire salary relating to services rendered in Mexico including the salary credited in India for that period is exempted.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2015 Thanks.

But do I need to present documents to Indian Income tax departmnet that i paid taxes in mexico

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 June 2015 When asked for it, then only you have to present.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2015 But as per the link below:
http://taxguru.in/income-tax-case-laws/living-allowance-deputation-temporarily-deployment-india-taxable.html#comment-1731479

the entire 'living allowance' should be tax exempted? or am i interpreting in wrong way?

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2015 Also, is there any exemption limit applicable under such scenario?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 June 2015 Your interpretation is correct any saving in living allowance will be taxable.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2015 As per the court ruling in the case:

http://taxguru.in/income-tax-case-laws/living-allowance-deputation-temporarily-deployment-india-taxable.html#comment-1731479

the entire "living allowances" are declared as tax exempted as the employee was on "tour" and not "transferred" to foreign location.

Considering that, the" living allowances" in scenario presented initially should not be tax exempted?