How to Claim I-T Exemption On Relocation Allowance

Over many years Pro Cochin House Shifting and Moving Packers offering responsible relocation services in Kochi Ernakulam also whole Kerala. Here we are explaining how to claim relocation expense from your company.

Most of the businesses are expanding beyond one location and establishing a multi-geographic presence as the globe transforms into a vast global village. As a result, people working for a company from one of their sites now have a variety of options for working and growing in different parts of the country without having to change their employment.

Frequent transfers and relocations from one city to another result in additional costs, such as moving into a new residence, relocating household belongings, finding a new school for your children, and so on.

These fees may be repaid by the company or paid directly by the employer in some situations.

We can help you understand how these allowances are taxed when you relocate your bag and baggage to a new city. The cost of movers and packers incurred by the employee is not taxed. Because it is the employee’s own liability, other home goods transportation, such as a car (which includes money spent on gasoline and driver fees), is taxable.

The employee’s personal obligation is to pay the brokerage to the property dealer in order to gain possession of the new home. As a result, if the employer bears the cost, it is taxable under the salary income heading. If the employer provides a relocation allowance, it will be taxed as part of the employee’s wage. Similarly, the school entry cost for children is recognized as a monetary benefit of the employee and is thus taxable. The Income-Tax Act exempts just the cost of train/air tickets for relocating a family and hotel accommodations for up to 15 days. This includes all boarding and accommodation costs, as well as meals.

What should you do to claim relocation expense?

Any allowance granted to meet the cost of travel on transfer (including packing and transportation of personal effects) or the ordinary daily charges incurred during the period of journey in connection with transfer can be claimed as tax-free under section 10 (14) of the Income-Tax Act, 1961, and rule 2BB of the Income-Tax Rules, 1962. (Ref Link) 

If an employee desires to take advantage of tax breaks while relocating, he or she must keep all documentation, proof of payments, and any other agreements signed with the employer about claims and payments paid during the transfer. The employer would need to claim these charges in its books of account under the business expenditure heading, in addition to maintaining it on file.

However, if the employer paid a higher relocation allowance than the actual costs, the difference is taxable.

Fact: Not every employee get relocation expense, only top priority employee get relocation allowances

How to Check the Eligibility?

1. Consult your HR manager or accounts officer to check the eligibility
2. Once after getting the information, ask them the maximum allowance limit
3.  Now, take quotes from GST registered Packers and movers like Pro Cochin House Shifting and Moving Packers
4. Ask them to Share the quote.
5. Submit it to the HR / Accounts manager
6. Usually, it approved within 7 days

Happy relocating with Pro Cochin Movers