Entertainment allowance in Income Tax:-
(आयकर में मनोरंजन भत्ता)
Entertainment allowance is given by the employer to employees for the purpose of meeting the entertainment expenditure like meeting, drinking, fooding, hotel staying, moving etc.
(मनोरंजन व्यय को पूरा करने के लिए नियोक्ता द्वारा कर्मचारियों को मनोरंजन भत्ता दिया जाता है जैसे बैठक, शराब पीना, खाना, होटल में रहना, घूमना आदि।)
In case of Non-Government/Private employees the entertainment allowance is fully taxable. However, in case of Government employee the full amount of entertainment is added to gross salary and deductible u/s 16(2) i.e. Minimum or least of the following three items.
(गैर-सरकारी / निजी कर्मचारियों के मामले में मनोरंजन भत्ता पूरी तरह से कर योग्य है। हालांकि, सरकारी कर्मचारी के मामले में, मनोरंजन की पूरी राशि सकल वेतन और घटाए गए यू / एस 16 (2) के लिए जोड़ी जाती है, यानी न्यूनतम या कम से कम निम्नलिखित तीन आइटम।)
1. Actual entertainment allowance received during the year
2. Maximum limit Rs.5000
3. 20% of salary
Formulas: EA = Actual Amount Received – Exempt
Entertainment allowance in Income Tax
Example of Entertainment allowance:
A govt. an employee named Mahesh is getting a basic salary of Rs. 2, 20,000 p.a. DA 40% of basic salary. And entertainment allowance of Rs.12000 during previous 2019-20. His actual expenses on entertainment were 15000. Computation of taxable amount of entertainment allowance for the assessment year 2020-2021.
Solutions:-
In case of the government, employee the following minimum or least for the AY 2020-21
Actual entertainment allowance = Rs.12000
Maximum limit = Rs.5000(minimum)
20% of salary (20% of Rs.2,20,000) = Rs.44000
Minimum amount is Rs.5000 is being exempt
Taxable Entertainment allowance = actual Entertainment amount received – exempt
= Rs.12000 – Rs.5000 = Rs.7000 is taxable
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