The Hindu Business Line : A taxing pilgrimage

MY WIFE and I travelled on LTA to different parts of the country.. We travelled from Haridwar to Rishikesh by car. Will the expense paid by way of car rental qualify for exemption under Section 10(5)? Will boarding and lodging expenses qualify for exemption under the same section? What is the maximum amount that can be claimed as exemption under Section 10(5)?

Parikshat

Reply

The exemption under Section 10(5) is available only for one travel in a calendar year and for two such travels in a block of four calendar years beginning from the calendar year 1986. Boarding and lodging expenses will not be eligible for the exemption. The maximum amount and the other provisions relating to claim of exemption under Section 10(5) is as follows:

Nature of exemption:

Leave travel concession/assistance (subject to prescribed conditions and limited to amount actually spent).

Value of travel concession/assistance received by an individual from his employer for himself and his family in connection with his proceeding.

On leave to any place in India;

To any place in India after retirement from service or after the termination of his service shall be exempt;

"Family", for the purpose of this provision means the spouse and children; and

Parents, brothers and sisters of the individual wholly or mainly dependent on that individual.

Eligible Assessees: Individual salaried employee.

Number of Trips: The exemption is available in respect of two journeys performed in a block of four calendar years commencing from the calendar year 1986. Where an individual does not avail himself of such travel concession or assistance once or on both occasions during any block of four calendar years, the value of travel concession or assistance first used during first calendar year immediately succeeding block of four calendar years shall be eligible for exemption. This exemption shall be in addition to the exemption that will be available in respect of two journeys for the succeeding block.

Quantum of Exemption:

Journey performed by air. Amount not exceeding air economy fare of the national carrier by the shortest route to the place of destination.

Any mode other than air — but rail service is available. Amount not exceeding air-conditioned I class rail fare by the shortest route to the place of destination.

(b)(i) rail service not available and recognised public transport system does not exist — An amount equivalent to the air-conditioned I class rail fare for the distance by the shortest route as if the journey had been performed by rail.

(b)(ii) rail service not available but recognised public transport system exists — An amount not exceeding the first class or deluxe class fare on such transport by the shortest route.

You will, therefore, be able to claim the cab rental as being eligible for exemption so long as you do not exceed the limits prescribed.

Query

I stay in a leased house and the lease period is three years. I have paid Rs 2.5 lakh for three years. This sum is refundable at the end of the lease period. What will be my eligibility for exemption under Section 10(13A) in respect of the HRA that I receive from my employer?

Raghavendra Raju

Reply

The exemption under Section 10(13A) in respect of HRA will be least of the following:

Actual HRA received

Excess of rent paid over 10 per cent of salary

50 per cent of salary if the accommodation is in a Metro city or else 40 per cent of salary

In your case, since there is no rent paid but only a deposit is given which is also refundable on termination of lease, there will be no exemption that you can claim under Section 10(13A).

Query

I receive a conveyance allowance of Rs 800 per month for commuting from residence to office and back and a reimbursement of medical expenses of Rs 1,250 per month from my employer. Will Fringe Benefit Tax (FBT) be payable on such sums received by me?

Ramanathan

Reply

No FBT is payable by your employer on the conveyance allowance paid to you. This sum will also be exempt in your hands under Section 10(14). One would have thought that medical expenses reimbursed would also not be subject to the FBT in the hands of the employer. However, the Circular of the Board clarifies that the reimbursement of medical expenses to the extent not taxed in the hands of employees, that is, up to Rs 15,000 per annum would be a fringe benefit and subject to payment of FBT by the employer. It may be noted that any sum by way of reimbursement of medical expenses up to this limit will not be taxed in the hands of the employee and that sums in excess of the said limit will be taxable in the hands of the employee.

Query

I have taken a housing loan of Rs 8 lakh for purchase of house. I have also paid Rs 60,000 towards stamp duty and registration charges. This sum is not paid out of the borrowed funds but out of my own money. Will it qualify for deduction under Section 80C?

Harshad M

Reply

You can claim the deduction under Section 80C in respect of stamp duty and registration fee incurred for the purpose of transfer of the house property to you. The fact that these expenses have been met out of your own funds and not out of borrowed funds will not disqualify you from claiming the exemption.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.)