Income Tax on Special Allowance Paid in India while in abroad

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  1. TkunalS

    TkunalS New Member

    Hi ,

    I am Indian citizen, employed in India in a MNC, I came to USA for 4 months assignment. I am paid Indian Salary and special allowance in Indian account.
    My company is deducting Income tax on the special allowance.

    My argument is , it is our allowance to be used by us for daily living. And if any tax should be applied, it should be applied on the amount remaining from special allowance after I have spent.

    Kindly suggest how I can convince my company , not to deduct any tax on special allowance.

  2. ZED

    ZED Well-Known Member

    Your argument is not tenable.
    Likewise you should also say that full salary should not be taxable, I have my own expenses. I will pay tax on what is left after my expenses.

    If not then why are you saying so for any allowance which is also a part of salary .The Income tax Act does provide exemption u/s 10 from some allowances like Transport allowance, house rent allowance. Further, a basic exemption limit, upto which there shall be no taxation.
    Last edited: Jun 8, 2016
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