India - Income Tax Act 2010 - Saarc

S. 10(13A) I.T. ACT, 1961 1.58(i) on the death of a beneficiary ; or(ii) to an employee in lieu of or in commutation of an annuity on hisretirement at or after a specified age or on his becoming incapacitatedprior to such retirement ; or(iii) by way of refund of contributions on the death of a beneficiary ;or(iv) by way of refund of contributions to an employee on his leavingthe service in connection with which the fund is establishedotherwise than by retirement at or after a specified age or onhis becoming incapacitated prior to such retirement, to theextent to which such payment does not exceed the contributionsmade prior to the commencement of this Act and any interestthereon;]94[ 95 (13A) any special allowance specifically granted to an assessee by hisemployer to meet expenditure actually incurred on payment of rent(by whatever name called) in respect of residential accommodationoccupied by the assessee, to such extent 96 [* * *] as may beprescribed 97 having regard to the area or place in which such accommodationis situate and other relevant considerations.]98[Explanation.—For the removal of doubts, it is hereby declared thatnothing contained in this clause shall apply in a case where—94. Inserted by the Direct Taxes (Amendment) Act, 1964, w.e.f. 6-10-1964.95. See also Circular No. 90, dated 26-6-1972, Letter F. No. 12/19/64-IT (A-I), dated2-1-1967 and Circular No. 9/2003, dated 18-11-2003. For details, see Taxmann’s MasterGuide to Income-tax Act.96. “(not exceeding four hundred rupees per month)” omitted by the Finance Act, 1986, w.e.f.1-4-1987. Earlier, in this omitted expression “four” was substituted for “three” by theFinance Act, 1975, w.e.f. 1-4-1975.97. Rule 2A prescribes the quantum of exemption available, which will be the least of thefollowing :Bombay/Calcutta/Delhi/MadrasOther Cities■ Allowance actually received ■ Allowance actually received■ Rent paid in excess of 10% of salary ■ Rent paid in excess of 10% of salary■ 50 per cent of salary ■ 40 per cent of salary‘Salary’ for this purpose includes basic salary as well as dearness allowance if the termsof employment so provide. It also includes commission based on a fixed percentage ofturnover achieved by an employee as per terms of contract of employment but excludesall other allowances and perquisites. In view of Explanation (ii) to rule 2A, basic pay,dearness allowance and commission are determined on ‘due’ basis in respect of the periodduring which rental accommodation is occupied by the employee in the previous year.Thus, emoluments of a period other than previous year are not to be considered, eventhough such amount is received (as well as taxed) during the previous year. Again,emoluments of the period during which rental accommodation is not occupied in theprevious year are left out of computation. It is important to note that where rent paid is10 per cent or less than 10 per cent of salary, no exemption will be admissible. Againexemption is denied where an employee lives in his own house, or in a house for which hedoes not pay rent.98. Inserted by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1976.