Shifiting Expenses Reimbursement
This query is : Resolved
Guest
Guest
(Querist)
21 December 2009
A company transferred its employee from Chennai to Mumbai.the employee incurred around Rs 50,000/- towards shifting which the company reimbursed.
Whether the same is taxable as perquisite or is exempt u/s 10(14)?
Please clarify.Its urgent.
Whether the same is taxable as perquisite or is exempt u/s 10(14)?
Please clarify.Its urgent.
21 December 2009
As my Opinion it is Employee`s Obligation met by the employer - it is taxable in the hand of employee
Other member`s reply obliged
Other member`s reply obliged
25 July 2025
The **reimbursement of shifting expenses** by a company to an employee **can be exempt** from tax **under section 10(14)** of the Income Tax Act, 1961, **if certain conditions are met**.
---
### ✅ **Relevant Provision:**
**Section 10(14)(i)** read with **Rule 2BB** allows exemption for:
> “Any such special allowance or benefit... granted to meet expenses wholly, necessarily and exclusively incurred in the performance of duties of an office or employment of profit.”
---
### 📦 **Shifting Expenses (Transfer Allowance):**
Under Rule 2BB(1)(c), the following is covered:
> “Transfer allowance to meet the cost of travel, packing and transportation of personal effects on transfer.”
So, **actual shifting expenses reimbursed** by the employer (i.e., for transporting household goods, travel fare, etc.) **are exempt** under **section 10(14)(i)** **if**:
1. They are actually incurred.
2. The reimbursement is **based on actual bills/invoices**.
3. It relates to **transfer from one place to another** in course of employment.
---
### ❌ Not Exempt If:
* The amount paid is **not supported by bills**.
* It’s paid as a **lump sum without evidence**, in which case it may be treated as a **taxable perquisite**.
---
### ✅ **Conclusion:**
In your case:
* If the ₹50,000 shifting expense is **actual reimbursement against bills**, it is **not taxable** in the employee’s hands (exempt under **Section 10(14)(i) r/w Rule 2BB**).
* If it's **not supported by documentation**, it may be treated as a **perquisite and taxable**.
Let me know if you want sample wording or documentation for HR/tax audit purposes.
---
### ✅ **Relevant Provision:**
**Section 10(14)(i)** read with **Rule 2BB** allows exemption for:
> “Any such special allowance or benefit... granted to meet expenses wholly, necessarily and exclusively incurred in the performance of duties of an office or employment of profit.”
---
### 📦 **Shifting Expenses (Transfer Allowance):**
Under Rule 2BB(1)(c), the following is covered:
> “Transfer allowance to meet the cost of travel, packing and transportation of personal effects on transfer.”
So, **actual shifting expenses reimbursed** by the employer (i.e., for transporting household goods, travel fare, etc.) **are exempt** under **section 10(14)(i)** **if**:
1. They are actually incurred.
2. The reimbursement is **based on actual bills/invoices**.
3. It relates to **transfer from one place to another** in course of employment.
---
### ❌ Not Exempt If:
* The amount paid is **not supported by bills**.
* It’s paid as a **lump sum without evidence**, in which case it may be treated as a **taxable perquisite**.
---
### ✅ **Conclusion:**
In your case:
* If the ₹50,000 shifting expense is **actual reimbursement against bills**, it is **not taxable** in the employee’s hands (exempt under **Section 10(14)(i) r/w Rule 2BB**).
* If it's **not supported by documentation**, it may be treated as a **perquisite and taxable**.
Let me know if you want sample wording or documentation for HR/tax audit purposes.
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