Can You Claim Tax Exemption On Relocation Expenses For Work In India?

With more and more people migrating across the country for projects and better opportunities, the popular commercial and industrial hubs of India are bustling with activity. Usually, when a person is relocating for work at the behest of the company he/she is working for, the company either pays for the relocation expenses or gives the employee a relocation allowance. Is this allowance taxable?

Section 10(14) (i) read with Section 17 of the Income Tax, 1961 and the rule 2BB of the Income-Tax Rules, 1962, state that any allowance or benefit given to an employee with respect to the expenses incurred by an employee exclusively for the performance of official duties is exempt from tax. This includes the cost of transportation and other costs incurred during the transfer from one destination to another. The ‘actual expenses’ incurred by the employee are only exempt from tax.

A person who is willing to claim such an exemption must have all the proof of payments and other documents ready to serve as proof during the filing of the IT return.

Some other points to note about reimbursements made for:

• The expenditure incurred for hiring a professional relocations company is tax-exempt.
• Transfer of personal liabilities like car, appliances etc. is taxable. However, if the car is used for such transportation, the expenses might be exempt but this depends on individual cases.
• Transportation costs and accommodation costs to relocate the employee and his/her family for a period of 15 days is tax-exempt.
• Real estate brokerage expenditure is taxable.

It is always wise to contact your chartered accountant to know more about your tax liability. For all your moving needs, you can contact us at 21st Century Relocations. We have a 24×7 support team, a strong global network and an experience worth more than a decade. Contact us to know more!

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