Income Tax on Per Diem Allowance.

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KALLOL CHAKRAVARTY (Querist)
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06 July 2011 Our company engaged in providing ship related services are required to send the staff for short period (2.5 months max in a year)overseas (Japan) to operate from Principal's Head Office. My query to you is that the per diem allowance paid under living & subsistence allowance can be tax free or are there any conditions imposed to it? Under which rule or circular of IT is it mentioned?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 October 2011 Taxability of 'per diem' allowances is a vexed issue. Per Diem allowance granted while on deputation is not taxable as long as the allowance was actually spent on deputation and of course satisfies the condition of 'reasonableness'.

Pl refer section 10(14) and CBDT Circular(FAQ 79) 8/2005 dated 29/08/2005

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