Taxability of commuter allowance

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2014 Hi,

Our company is planning to provide one allowance to female employees only, which is basically to enable them to spend money for their daily commuting from office to home in the evening. This will be outside CTC. However, there is also one allowance called "Transport Allowance" of Rs.800, which is treated as tax-exempt for tax computation purposes.

I feel that the Commuter allowance must be treated as part of CTC and appropriate tax has to be deducted. As we are giving two allowances of similar nature, can I have multiple views from different experts as to how they would prefer to treat these for tax purposes?

Thanks!

Amol S Joglekar

Amol S Joglekar (Expert)
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21 November 2014 Give it as transport allowance. Exempt 800 p.m. out of that. Why to give one more nomenclature?

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2014 Dear Amol,

Thanks for your reply, but HR doesn't want to include it as a part of payroll, and want to keep this as separate allowance.

Share your views.

Thanks!

Amol S Joglekar

Amol S Joglekar (Expert)
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21 November 2014 You can give it as reimbursement. You need to take a declaration from the women employees that they have incurred the amount in full for the purpose it has been given and that any liability arising out of false/ malafied declaration shall be borne by me/us
(In that case, it will not become taxable in their hands respectively)

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2014 Great, Thanks for your reply.

Amol S Joglekar

Amol S Joglekar (Expert)
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21 November 2014 You are welcome.
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