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TMI BlogExemption of house rent allowance under clause (13A) - Eligibility and computationX X X X Extracts X X X X X X X X Extracts X X X X ..... urth Schedule to the Act, i.e., @ "salary" includes dearness allowance if the terms of employment so provide but excludes all other allowances and perquisites. A question has arisen about the treatment to be given to the element of "dearness pay" in relation to rule 2A insofar as Government servants are concerned. With the issue of orders in the Government of India, Ministry of Finance (Department of Expenditure), O.M. No. F. 1(34) E-II(B)/68, dated 18-1-1969, "dearness pay" is considered as "pay" for purposes of pension and gratuity and compensatory allowance (including house rent allowance, etc.) in the case of Central Government servants. It is, therefore, clarified that for the purposes of calculating the house rent allowance that would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occupied by the employee. The limits for the purposes of exemption of house rent allowance under section 10(13A) have been laid down in rule 2A. Though for purposes of grant of house rent allowance, a rent receipt may not be insisted upon by Government, it is necessary for granting the exemption under section 10(13A) that the employee should have actually incurred the expenditure on rent. For purposes of deduction of tax, therefore, the disbursing officer should ensure that the employee concerned has in fact incurred the expenditure on rent. The payment of rent should be verified through rent receipts in the cases of all employees. 3. A reference is also invited to the Finance Ministry's letter F. No. 12/19/64-IT(B), dated 8-1-1965, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Rs. 90; b. Rs. nil (expenditure on rent in excess of one-tenth of salary); c. Rs. 120; d. Rs. 300. No exemption is available in this case. 4. It is also clarified that the house rent allowance paid to a person, who is living in his own house or in a house for which he does not actually pay any rent, is not exempt from tax in any circumstances. Letter : F. No. 12/19/64-IT(A-I), dated 2-1-1967 clarification 3 1. Reference is invited to the Board's letter No. 12/19/64-IT(B), dated 8-1-1965, addressed to all State Governments. A question has been raised whether the house rent allowance at flat rates sanctioned to Central Government servants without verification of rent receipts vide the Ministry of Finance (Department of E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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