Question

Question 2

2.1 Bob Miller received a travel allowance from his employer amounting to R 65 000 for the current year of assessment. He uses his car for business and private travels. He bought this car a year ago for R 230 000 (including VAT). Bob travelled a total of 14 500 kilometres during the current year of assessment, of which 9 500 were for private purposes. He also kept an accurate record of expenses incurred in respect of the car for the current year of assessment. The costs are as follows: R Finance charges R 39 555 Maintenance cost R 5 500 Fuel cost R 11 500 Insurance premiums and licences fees R 4 250

Required: Calculate the taxable portion of the travel allowance received by Bob for the 2019 year of assessment.

Answer 1

Section 10(14) of The Income Tax India Act, 1961 read with Rule 2BB provides for exemption of transport allowance. Exemption is as follows:

Transport allowance for commuting from place of residence to place of duty - Rs. 1600/- per month.

However as per new provision government has provided falt deduction of Rs. 50000/- from gross salary of an empoyer which contains the part of transport allowance.

Therefore details other than Rs. 65000/- is irrelevent for calculation.

Taxable portio of the travel allowance = 65000 - 50000 = 15000