As such the present Income tax
provisions stipulate that Transport Allowance received in excess of Rs.800 is
taxable. Railway Board has taken up this issue with Ministry of Finance for
amending the Income Tax Provisions to the effect that Transport Allowance up
Rs.3200 is exempted.
The Railway Board has cited the very
reason that prior to implementation of sixth pay commission report,
entire transport allowance paid to government employees was exempted
under Income tax provisions.
The VI CPC, while reviewing the
system of grant of Transport Allowance has recommended to enhance the same
from Rs.100 to Rs.800, Rs.400 to Rs.1600 and Rs.800 to Rs.3200, for Pay
Bands 1 to 4 respectively. The City Compensatory Allowance was
Withdrawn. It was also recommended to provide the coverage of DA. to
Transport Allowance as per increase in the Consumer Price Index. However,
the amendment which is needed to exempt the enhanced Transport Allowance is yet
to be made by Income Tax Department / Finance Ministry.
The full text of this Office
Memorandum dated 10.10.2012 is given as follows
GOVERNMENT OF INDIA
MINISTRY OF RAILWAYS
(RAILWAY BOARD)
No. F(X) I-2012/23/4
New Delhi, dated 10.10.2012
OFFICE MEMORANDUM
Sub: Exemption of
Transport Allowance from the purview of Income
Tax- Enhancement of exemption limit from Rs. 800/- to Rs. 3200/-
plus D.A. thereon.
The undersigned is
directed to draw the attention of the Ministry of Finance (Department of
Revenue) Central Board of Direct Taxes towards para 5.2(10) (i) at page 14
of their circular No. 05/2011 dated 16.08.2011 wherein it has been
specified that the transport allowance granted to an employee to meet
his expenditure for the purpose of commuting between the place of his
residence and the place of duty is exempt to the extent of Rs. 800/- per
month.
Representations are
being received in the Ministry of Railways from various federations of
Railways. The Federations have represented that Transport Allowance was
introduced with the concept of providing financial support to the Central
Government Employees who incur considerable amounts for their
day-to-day travel from their residence to the work place. This had
materialized based on the recommendations of the V CPC which introduced
Transport Allowance in 3 slabs at the rate of Rs.100. Rs.400 and Rs.800,
based on the classification of the cities/towns under
Urban Agglomeration Act. Further, a prerequisite was introduced to allow
this facility for those who stay beyond 1 km radius from the place of
work.
A decision was taken
to equate such allowance on par with normal Travelling/Daily Allowance and
these amounts have also been exempted from computation of annual income
and exempted from the purview of Income Tax vide Income Tax (Eighth
Amendment) Rules, 1995 notified vide F.No.142/9/95-TPL dt. 7-7-1995.
The VI CPC, while
reviewing the system of grant of Transport Allowance has recommended to
enhance the same from Rs.100 to Rs.800, Rs.400 to Rs.1600 and Rs.800
to Rs.3200, for Pay Bands 1 to 4 respectively. The City Compensatory
Allowance was Withdrawn. It was also recommended to provide the coverage
of DA. to Transport Allowance as per increase in the Consumer Price Index.
Ministry of Finance
are therefore requested to include the request of the Railways for taking
due action for enhancing exemption of Transport Allowance from the purview
of Income Tax from Rs. 800/- to Rs. 3200/- plus DA Thereon.
sd/-
(M.Anand Krishna)
Deputy Director, Finance (Exp.)
Railways may sanction 78 days bonus for the year 2011-12
In spite of shrinking profits, Railways is likely to declare around 78 days wages as bonus to employees for the work done by them in the previous year (2011-12).Unlike Central Government Employees Railway are entitled for productivity link bonus.
As per various media news, PLB (productivity linked bonus) for railways may be disbursed before Dusshera festival.
However, Railway unions are demanding for 80-day bonus for this year. Railway employees were paid the 78-day bonus in the previous year 2010-11.
The rough number of employees in Railways is 13.26 lakhs out of which around 1.26 lakhs employees are not eligible for bonus.
It is said that 78 days bonus might cost Railways around Rs.1000 crores.
As per the calculation procedure in the previous years, there is a ceiling of Rs.3500 as far as monthly wage of an employee for the purpose of bonus is concerned. In other words, if a monthly salary of an employee exceeds Rs.3500 per month the same will be limited to Rs.3500 per month while calculating bonus.
