Professional development allowance

Section 10(14)(i) of the Act allows an exemption in respect of any special benefits or allowances granted by employer to the extent to which such expenses are actually incurred for that purpose.

According to Rule 2BB(1)  (e) any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions is exempt if spent fully.      

As per the case: Income Tax Appellate Tribunal – Mumbai: Madanlal Mohanlal Narang vs Assistant Commissioner Of Income ... on 21 April, 2006 The ruling is that

“As far educational allowance is concerned, Rule 2BB(1)(e) provides that any allowance granted for encouraging the academic research and training pursuits in educational and research institutions is eligible for exemption under Section 10(14)(i). But then, the assessee is working a ship and it cannot be said that the allowance was granted to him for "encouraging the academic research and training pursuits in educational and research institutions". In our humble understanding, an academic or research allowance could be eligible for exemption under Section 10(14)(i) r/w Rule 2BB only when "academic research and training pursuits" are in educational and research institutions.”  

 

If a person is working in a company X (which is not a educational or research institute) and receiving a professional pursuit allowance from X and if he is also perusing for a online post graduate degree from a US university and paying fees from India in US dollars (for which invoices from the US university are available), then can the person claim exemption under Section 10(14)(i) r/w Rule 2BB. 

 

If a person is working in a company X (which is not a educational or research institute) and receiving a professional pursuit allowance from X and if he is also perusing for a online post graduate degree from a US university and paying fees from India in US dollars (for which invoices from the US university are available), then can the person claim exemption under Section 10(14)(i) r/w Rule 2BB.  

Please clarify through your expert advice. 


 

However, the employee can claim maximum Rs. 100 per month as exemption or Rs. 1200 per annum. The exemption is allowed for a maximum of 2 children. According to Rule 2BB(1) (e) any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions is exempt if spent fully.

Section 10(14)(i) of the Income Tax Act, 1961 provides for certain exemptions from tax for allowances granted to employees. Rule 2BB of the Income Tax Rules, 1962 specifies the conditions for claiming these exemptions. Let me explain these provisions in detail.

Section 10(14)(i):
This section provides for various allowances granted to employees that are exempt from income tax. These allowances include:

1. Any special allowance or benefit granted to meet expenses wholly, necessarily, and exclusively incurred in the performance of the duties of an office or employment of profit.
2. Any allowance granted to meet the cost of travel on tour or on transfer of duty.
3. Any allowance granted on tour or for the period of journey in connection with transfer to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

Rule 2BB:
This rule lays down the conditions that need to be fulfilled to claim the exemptions mentioned in Section 10(14)(i). These conditions are as follows:

1. The employee should actually incur the expenses for which the allowance is granted.
2. The allowance should be specifically granted for meeting the expenses.
3. The allowance should be utilized for the purpose for which it is granted.
4. Any unspent allowance should be returned to the employer.
5. If the allowance is not granted for any particular period or is less than the actual amount spent, then the excess amount can be claimed as a deduction from the taxable salary income.