IT returns related issues for PBOR in armed forces: Money Control
Due to the special nature of duties of the armed forces, certain allowances are paid to meet that requirement. Of these allowances some are subject to tax and some are not.
Filing of returns
When it comes to filing of returns, the deadline for all salaried individuals is the 31st of July every year. After the completion of the financial year, respective CDAs/AFCAO issue Form 16 for the amount of tax deducted and deposited into Government. This is the basis for filing tax returns. The ITRs can be filed online through the Income Tax tax filing portal where the income is more than Rs 5 lakh and in cases where it is less than Rs 5 lakh manual filing is also allowed. Manual filing can be done on their own or often it is done through their respective CDAs/AFCAO.
Allowances which are taxable
Due to the special nature of duties of the armed forces, certain allowances are paid to meet that requirement. Of these allowances some are subject to tax and some are not. The ones falling under the tax purview are Military Service Pay, Grade Pay, Classification Allowance Group Pay, Composite Personal Maintenance Allowance, Good Conduct/Service Badge Pay, House Rent Allowance, Language allowances, Instructional Duty Allowances , Officiating Allowances, Para /Flying Allowances/Submarine Allowances, special Forces allowance, Sea Duty Allowance etc. Other normal allowances like Dearness Allowance, Transportation Allowance (limit) are all taxed at the rates according to the respective Income Tax slab of PBOR.
Allowances taxed according to limits
Under the Sixth Pay Commission the rates for certain risk related allowances were increased. However, Government has given exemptions or limits to certain special allowance up till which it will remain non-taxable. Rest of the amounts paid under those allowances would be taxed. Those are
| 1 | Siachen Allowance | Rs.7000/-per month |
| 2 | Special Compensatory (Remote locality)allowance Category 1-SCA “A” | Rs.1300/-per month |
| 3 | SC(RL)A Category II-SCA “B” | Rs.1050/-per month |
| 4 | SC(RL)A Category III-SCA “C” | Rs 750/-per month |
| 5 | SC(RL)A Category IV-SCA “D” | Rs 200/-per month |
| 6 | Compensatory Field Area Allowance (CFAA) | Rs 2600/-per month |
| 7 | Compensatory Modified Field Area Allowance (CMFAA) | Rs 1000 per month |
| 8 | Any special Allowance in the nature of Counter-Insurgency Allowance (SCCIA) | Rs 3900 per month |
| 9 | HAUCA for Altitude of 9000 to 15000 feet (HAUCA ‘I’) | Rs 1060 per month |
| 10 | HAUCA for Altitude above 15000 feet (HAUCA ‘II and III’) | Rs 1600/- per month |
| 11 | Highly Active Field Area Allowance (HAFA) | Rs 4200/- per month |
| 12 | Island (duty) allowance granted to the members of Armed Forces For Andaman and Nicobar and Lakshadweep group of islands | Rs 3250/- per month |
| 13 | Hard area Allowance | Rs 1300/- per month |
| 14 | CEA | Rs 100/- per month per child for maximum of 2 children |
| 15 | Hostel Subsidy | Rs 300/- per month per child for maximum of 2 children |
| 16 | Entertainment allowance | A Sum equal to 1/5th of salary (excluding any allowance / benefit) or Rs 5000/-per annum whichever is less. |
| 17 | LTC | Actual expenditure up to the limit of entitlement |
| 18 | HRA/HRR For Bombay / Kolkata / Delhi/Chennai | The least of the following three,i.Allowance actually received ii.Rent paid in excess of 10% of salary iii.50% of salary |
| 19 | HRA/HRR for other cities | The least of the following three i.Allowance actually receivedii.Rent paid in excess of 10% of salaryiii.40% of salary |
| 20 | Special compensatory (tribal areas/schedule areas/agency areas)allowances | For specified places –Rs.200/- per month |
| 21 | Transport allowance granted to an employee to meet his expenditure for the purpose of commuting between place of his residence & duty. For whole of India | Rs.800/- per month |
| 22 | Transport allowance granted to a blind or orthopadeically handicapped employee with disability of lower extremities to meet his expenditure for the purpose of commuting between place of his residence & duty. For whole of India | Rs.1600/- per month |
Source: PCDA(O) Pune
Fully Exempt allowances
The below mentioned allowances would be entirely exempt from payment of income taxes. Some of the below are paid only to officers.
- Gallantry Award
- Foreign Allowance
- Bhutan Compensatory Allowance
- Servant wages Allowance
- Purchase of Crockery / Cutlery / Glassware
- Outfit Allowance on posting to Embassy
- Arrears of cash Grant Foreign Allowance (Nepal)
- Myanmar Allowance
- Representational Grant for use of crockery set
- Encashment of Leave on retirement whether on superannuation or otherwise
- Any Allowances granted for encouraging academic, research and training pursuits in educational & research institution (training & study leave allowance)
- Outfit Allowance
- Compensation for the change of uniform
- Kit maintenance Allowance
- Uniform Allowance (MNS)
- Special Winter uniform Allowance
- Any payment from provident fund
- Payment of compensation Disability Pension
- Reimbursement of Medical Expenses
Calculation of Taxes
Taxes are calculated after deducting the amount of allowances deductible from the pay.Tax deductions are made at source by CDA/AFCAO. It is also essential that the individual also promptly informs the authorities of the other deductions he would be claiming under various provisions of Income Tax Act under Sec 80 and other acts like PPF, Insurance, house loan EMI or principal repayments etc.
Refund of Taxes If any
After the IT return is filed, the concerned Assessing Officer would assess the return, determine if taxes are paid accurately and in case taxes are underpaid, a Demand Notice would be raised. If there is excess payment of taxes, a refund will be initiated. The refund will be credited directly into the bank account provided in the return, under intimation to the individual. It is therefore mandatory that email and bank account details are filled in accurately in the ITR.
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