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 taxability: lump-sum payments not meeting prescribed exemption conditions are taxable as salary for transferred employees.
A lump-sum relocation payment that reimburses personal shifting costs and is not paid against actual bills does not satisfy the prescribed exemption conditions for a special allowance and, unless specifically included under the notified exemption categories, must be treated as salary income and taxed accordingly.