Urgent help......

Dear Anuj,

Allowance & Perks - Generally both are taxable unless specifically exempted

1) Generally that component of Salary which is fixed in nature is called as allowance whereas perks may vary from month to month.

2) Allowance are given only in monetary terms whereas perks may be monetary as well as in kind.

3) Generally allowances are given irrespective of actual expenditure incurred by the employee where as perks included reimbursements of expenses

4) Eg - Allowances - HRA, DA, CCA, Transport Allowance, Medical Allowance etc

Perks - RFA, Medical Reimbusemnets, Concessional Loan, Gifts, vehicle etc

Attention should be paid regarding the limits prescribed under the Act/Rules in respect of Allowances, I mean these are the limits of exempted amount whereas the amount computed as per Valuation of perquisite is the taxable amount.

Deduction & Exemption - Both has the effect of reducing Taxable Income

1) Deduction is allowed out of Income as a means of arriving at Income under any head or Taxable Income whereas exemption means that the source from which Income is derived in itself not chargeble.

2) Loss from a source where Deduction is allowed can be set off n carried forward whereas Loss from a exempted source cannot be setoff n carried forward.

3) Eg - Deduction - Salary - Professional Tax , HP - Municipal Taxes, PGBP/Other sources - All legitimate expenses, Capital Gains - Cost of Acquisition, Inprovement, expenses on transfer, etc

GTI - Donations, eligible savings, etc

Exemptions - Sale of Shares on stock Exchange after holding it for 1 year, Agriculture Income, etc