Is Savings Out Of Daily Allowance Taxable?

(14) (i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of , specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profitas may be prescribed, to the extentto which such expenses are actually incurred for that purpose ;

(ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profitare ordinarily performed by him or at the place where he

ordinarily resides, or to compensate him for the increased cost of living, as may be prescribed and

to the extentas may be prescribed

However, great news is that CBDT by virtue of a circular explaining the Fringe

Benefit Tax scheme clarified vide the circular 8/2005 contains answer 79 which is

regarding the FBT on Employers for allowing Per Diem . The extract of the

question and answer is given below:

“On some occasions, employers prefer to give a per diem allowance for meeting the expenditure on lodging and boarding rather than making payments on actual basis. The per diem allowance is exempt from tax under section 10(14). Would this be subject to FBT?

79. Since the per diem allowance is paid for the purposes of use of hotel, boarding and facilities, it would fall within the scope of clause (G) of sub-section (2) of section 115WB. However, the employees will not be liable to pay income-tax on any surplus accruing to him from such allowance.”

Therefore, if your company deduct the FBT on those sums of money paid to you as allowance ,same is not taxable in your hand under I T Act. I had already answered this question in details