Telephone Allowance Exemption: A Complete Guide ABCD Aditya Birla Capital

Did you know that as a salaried employee, you can claim reimbursement for internet and telephone bills and receive tax exemption?You must check with your employer to see if they offer a telephone allowance exemption under section 10 of the Income Tax Act, 1961. If they do, read this blog for details about the internet and telephone allowance exemption, points to consider, and how to claim it.

• You can claim internet and telephone allowance exemption to save tax.
• The telephone allowance exemption is provided under section 10, rule 3(7)(ix) of the Income Tax Act, 1961.
• You can claim reimbursement and exemption upon submitting the proof of expense.
• The connection should be in your name for the internet allowance exemption and telephone bill tax exemption.

Rule 3(7)(ix) of the Income Tax Act, 1961 provides a provision for the internet and telephone bill exemption in Income Tax. This rule empowers you to claim a 100% internet bill tax exemption and telephone bill tax exemption, providing significant savings on your tax liabilities .This internet allowance exemption and telephone allowance exemption include the following:

• Telephone bills tax exemption : Landline
• Telephone bills tax exemption : Mobile phone
• Internet allowance exemption : Mobile
• Internet allowance exemption : Home Wi-Fi

You can claim a telephone reimbursement exemption on a reimbursement basis only. The reimbursement basis allows mobile allowance exemption when you submit the actual bill.Telephone reimbursement income tax exemption is applicable since these reimbursements are considered necessary expenses for performing your official duty.However, you cannot claim a telephone allowance exemption if you receive a fixed amount for your telephone and internet bill. These expenses are considered part of your salary and taxable per your tax slab. Also read: A Guide to Tax Saving Under Section 10 (10D) of Income Tax

If you are thinking of taking advantage of the telephone allowance exemption, keep the following points in mind:

• The government has no prescribed limit that you can claim through telephone allowance exemption. However, the maximum reimbursement amount depends on your salary grade.
• The company usually reimburses you for one internet and mobile/landline connection.
• The connection should be in your name to claim a telephone allowance exemption.
• You can claim telephone allowance exemption for both prepaid and postpaid services.

You cannot claim telephone reimbursement in income tax return (ITR) but through your employer. Submit the required proof to your employer within the stipulated deadline to claim telephone allowance exemption.If you fail to submit proof of reimbursement within the deadline specified by your employer, then the employer deducts tax and does not give you the tax benefit. In that case, you must claim a tax refund while filing your ITR .Internet and Telephone Allowance Exemption in New Tax RegimeWith the introduction of the new tax regime, your follow-up question will be whether the telephone allowance exemption applies to the new tax regime.The telephone allowance exemption is one of the few exemptions you can take advantage of in the new tax regime.

The government of India has given some tax exemptions for salaried employees in the form of internet and telephone allowance exemptions . This is valid if your employer reimburses you for your telephone and internet bills, considering the expenses incurred while performing your official duties.Stay abreast with the ABC of taxes that may affect your financial future with Aditya Birla Capital. Our official website provides the necessary details.