• Home
  • National News
  • Bad news for salaried! Your daily travel allowance will be taxed now if you fail to submit actual bills
Bad news for salaried! Your daily travel allowance will be taxed now if you fail to submit actual bills
National  
Financialexpress

Are you a salaried person and get daily allowances from your company while on official tour either in India or abroad? Then better keep the evidence of actual expenses incurred, otherwise you will have to pay tax on it.

 

Are you a salaried person and get daily allowances from your company while on official tour either in India or abroad? Then better keep the evidence of actual expenses incurred, otherwise you will have to pay tax on it. The Andhra Pradesh High Court has recently ruled that allowance paid to employees for meeting personal expenses is taxable as perquisite, and the employer is liable to deduct taxes on it.
 
The Case
 
Sun Outsourcing Solutions Private Ltd (Sun India / applicant), a private limited company having its office in Hyderabad and branch office at London, UK, deputed employees from India to work in its branch office, besides employing non-resident Indians (NRIs) in the UK. The employees continued to be on the payroll of Sun India and received salary in India. Boarding and lodging allowances were paid as a lump-sum in the UK. The salary payments for the NRIs were paid in the UK. Sun India continued to operate withholding taxes on the salary paid in India. However, taxes were not withheld on allowances paid in the UK to employees and salary payments made to NRIs employed overseas.
 
According to a Deloitte note, the Assessing Officer (AO) charged taxes on the allowances and salary payments made in the UK besides levying interest thereon for assessment years 2000-01 to 2003-04. Aggrieved by the order of AO, Sun India filed appeals before the Commissioner of Income-Tax, Hyderabad [CIT (A)] where the CIT (A) set aside the demand to the extent such demand was in relation to the salary payments made to NRIs. The CIT (A) upheld the orders of the AO with regard to the boarding and lodging allowances paid to resident employees with a direction to consider the particulars furnished/ to be furnished and applying appropriate rate of tax as applicable to different employees.
 
The orders of the CIT(A) were challenged by Sun India before the Income-Tax Appellate Tribunal, Hyderabad, which dismissed the appeal. Aggrieved by the aforesaid decision of the Tribunal, the applicant filed petition(s) before the Andhra Pradesh High Court.
 
HC Ruling
 
The HC upheld the contention of tax authorities that any allowance paid to the assessee to meet his personal expenses at the place where the duties of his office are ordinarily performed is not exempt under the Income Tax Act. And, for an allowance to be exempt, it should have specifically been granted wholly in performance of duties.
 
It ruled that applicant is legally bound to deduct taxes in absence of any certificate obtained from employee so as to not to deduct tax or deduct tax at lower rate and exemption, if valid, can be claimed by the employee on submission of necessary evidence before the tax officer.
 

 
 


 
 


 
More in National
Maruti Suzuki XL6 launched at Rs 9.80 lakh

6-seater MPV is positioned as a premium alternative to the Ertiga and will be sold from Maruti's Nexa dealership chain.

Recently posted . 9 views

Your smartphone is making you stupid and this study is proof!

We check our smartphones every waking minute. But did you know that your dalliance with this gadget can seriously impact your problem-solving ability?

Recently posted . 8 views

Hyundai Grand i10 Nios launched: Top five highlights

Post much wait, Hyundai has finally launched the Grand i10 Nios in India. The feature-loaded hatchback is available in four variants – Era, Magna, Sportz an...

Recently posted . 14 views

Samsung Galaxy Note 10, Galaxy Note 10+ With S Pen Support Launched in...

Samsung Galaxy Note 10 price in India is set at Rs. 69,999, whereas the Samsung Galaxy Note 10+ price starts at Rs. 79,999.

Recently posted . 9 views

Here's what the Redmi Note 8 Pro will look like

Xiaomi's sub-brand Redmi is busy working on its next mid-rangers, the Redmi 8 series. The Redmi 8 itself was spotted in some hands-on images earlier today, an...

Recently posted . 12 views

The Quantum Revolution Is Coming, and Chinese Scientists Are at the Fo...

China’s drive to dominate a field with big economic and military applications outpaces some US strides.

Recently posted . 10 views

 
 
 

Prashnavali

Thought of the day

“Success is simple. Do what’s right, the right way, at the right time.”
Arnold H. Glasgow