778/CBDT.

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....n in the Board recently. It was noticed that some of the allowances claimed to be tax-free are really in the nature of perquisites as defined u/s 17(2) of IT Act and consequentially taxable as salary, while others being in excess of what could be reasonably considered as expenditure required to be incurred wholly, necessarily and exclusively in the performance of duties, are liable to tax to the e....

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....to accept that the entire amount has to be actually spelt wholly, necessarily and exclusively for the purposes of employment. Even under Rule 6D of the IT Rules, 1962, the maximum amount deductible in the assessment of employers towards daily allowance payable to employees is Rs.120 per diem only and this amount covers hotel charges as well. It may therefore be assumed with justification that a th....

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..... It should therefore be subjected to tax as perquisite in the hands of the recipients. (d) Other allowances such as house rent allowances which have hitherto been treated as tax-free should continue to be so treated, subject to the conditions and within the limits prescribed in the IT Act/Rules. The commanders and pilots of the Airlines enjoy several such tax free allowances and perquisites. Apa....