APPLICABLITY OF THE PROVISION OF SECTION 10(14) OF INCOME TAX ACT 1961 TO RELOCATION ALLOWANCE GRANTED BY A FOREIGN COMPANY TO ITS EMPLOYEES ON RELOCATION TO THE COMPANYYS IN

[ABHAYA NAIK]

An employee of BANQUE NATIONAL DE PARIS transferred its employee working at its SINGAPORE establishment to the banks Chennai office in India wef 05/12/2024. as per the transfer policy of the bank a lumpsum amount of rupees 1081068 / has been paid to the transferred employee as relocation allowance to assist the transferred employee in defraying miscellaneous cost that the employee may incur as a result of his relocation from Singapore to Chennai in India. this lump sum amount of rupees 1081068 / has been paid to the employee in his salary for the month of December 2024 in Chennai India. the finance dept of BANQUE NATIONAL DE PARIS CHENNAI has deducted tax at source from such relocation allowance of rupees 1081068/ presuming such relocation allowance to be taxable salary in India .

Now while filing ITR for FY 24-25/ay 25-26 can the employee claim exemption under section 10(14) of income tax act 1961 in respect of this relocation allowance of rupees 1081068/ please cite any case laws from ITAT /HC/supreme court/ or circulars or notification which may support the taxpayers stand about complete exemption of relocation allowance received under section 10(14) of income tax act 1961

AI Summary

Relocation Allowance Dispute: Foreign Bank Employee Challenges Tax Deduction on Transfer Expenses Under Section 10(14) An employee of a foreign bank received a relocation allowance of Rs. 1,081,068 when transferred from Singapore to Chennai. The finance department deducted tax at source, presuming the amount taxable. The employee seeks exemption under Section 10(14) of the Income Tax Act. The reply indicates that lump sum relocation allowances are generally not exempt, as they are considered personal expenses and do not meet the specific conditions of Rule 2BB, thus remaining taxable as part of salary income.