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Deputation Allowances given to an employee, when he is sent on deputation for a Allowance temporary period from his permanent place of service. Entertainment It is an allowance to meet expenditure on entertainment, by whatever Allowance name called. Government employee can claim deduction w's 16(i) discussed later in this chapter. House rent allowance (HRA) [Sec. 10(13A) and rule 2A] An allowance to meet the expenses in connection with the rent of the house, by whatever name called Tax Treatment: Minimum of the following is exempted from tax: a. Actual HRA received b. An amount equal to 50% of salaryl (when house is situated in a metro city) or 40% of salaryl (when house is situated in any other place) for the relevant period c. The excess of rent paid over 10% of salary. [Arithmetically. (Rent Paid - 10% of Salary)] Salary here means: Basic + D.A. (if it forms a part of retirement benefit) + Commission as a fixed % on turnover. Notes s11 a) Salary shall be determined on due basis for the period for which the employee occupies rented accommodation in the previous year and gets HRA. b) Exemption is not available if employee lives in his own house, or in a house for which he does not pay any rent. c) For criteria of 50% or 40% of salary as deduction, place of employment is not significant but place where the house is situated is important. d) Deduction from HRA depends on Salary of the employee, Amount of HRA, place of residence (not place of employment), rent paid by the employee. ILLUSTRATION X, a resident of Ajmer, receives 48,000 as basic salary during the previous year 2018-19. In addition, he gets * 4,800 as dearness allowance forming part of basic salary, 7% commission on sales made by him (sale made by X during the relevant previous year is 86,000) and 6,000 as house rent allowance. He, however, pays 5,800 as house rent. Determine the quantum of exempted house rent allowance

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