Taxability Relocation allowance
Relocation allowance is exempt to the extent of actual expenses as per section 10(14) of the Income-Tax Act, 1961, read with rule 2BB of the Income Tax Rules, 1962. It includes any allowance to meet the cost of travelled on transferor the ordinary charges incurred during the period of journey.
If the amount paid by employer is more than actual specified expenses incurred, the difference will be taxable as salary in the hands of employee. Necessary documents of substantial payment of expense towards transfer should be maintained and same should be submitted to the employer.
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