Entertainment allowance in RFA

Tax queries 2806 views 5 replies

Nand Kishor Agrawal

Article

158 Points Joined August 2007

Hey everyone..

I have a querry...

1)What amount of entertainment allowance we will consider while computing salary for rent free accomodation???i mean while including allowance for chargeability of rent free accomodationwhat amount of entertainment allowance we will consider-original entertainment allowance received or actual amount received less standard deduction on entertainment allowance???

2) As per ICAI circular no question will be asked regarding tax audit related to fbt..does this circular also mean that no que including fbt will b asked in income tax exam also or it is applicable only for audit????

Please treat it urgent as i have my nov attempt fo PCE....

Thanx in anticipation...

Replies (5)

Sandeep Pandey

CA FINAL

1306 Points Joined October 2008

According to condition given for calculating the RFA :

15 % of Salary ( If Population exeeds 2500000 )

10 % of Salary (If Papulation is 1000000 - 2500000 )

7.5 % of Salary (If Papulation is below 1000000 )

In this salary includes

Basic pay + DA ( if taken for retirement benifit ) + All taxable allowances

Then offcourse it ll include entertainment allowances if is taxable in the hands of employee. Whether he is govt. or non govt. employee.

Sandeep Pandey

CA FINAL

1306 Points Joined October 2008

The taxable entertainment allowance will be the taxable portion in the hand of employee....

Sandeep Pandey

CA FINAL

1306 Points Joined October 2008

We cant expect anything as it is CA exam. Better to cover all portion. Which u r thinking its not important go through once.................

Sanjay Bansal

CA Finalist Awaiting the Final FRUIT

205 Points Joined December 2008

The ent. Allowance is always taxable in the hands of employee if he receives so when he is employed in a pvt or pub co. And in case of govt Rs. 5000 or exp incurred whichever is low is exempt & rest is taxed