Your Taxes

I am working in Jawahar Navodaya Vidyalaya, which is under the Human Resources Ministry of the Central Government. Please clarify whether the following allowances paid to us are entitled to any tax exemption: Children’s education allowance: ₹1,800 per month per child for day scholar and ₹4,500 per month per child for hosteller; residential allowance — 10 per cent of pay. We are living in government quarters. No HRA is paid. Travelling allowance — ₹1,600 per month. (Every Navodaya school is in the remote part of a district).

P Anuradha

Salaried employees receiving children education allowance (CEA) and hostel expenditure allowance can claim exemption to the tune of ₹100 and ₹300 (per month per child and maximum of two children) respectively under Section 10(14) of the Income Tax Act, 1961 (‘Act’) read with Rule 2BB of the Income Tax Rules, 1962 (‘Rules’). Further, ₹1,600 per month (₹3,200 per month for blind, deaf, dumb and handicapped employees) is exempt on travel allowance. However, with effect from financial year 2018-19, the exemption on travel allowance has been removed. Since you are not paid any house rent allowance, there would be no deduction available.

There are also exemptions for special compensatory allowances in the nature of border area allowance, tribal area allowance, difficult area allowance etc. These allowances are eligible for exemption from tax up to a certain limit, provided the employees are given these specific allowances and are rendering services in notified areas.

I am a shareholder in a cooperative bank in Mumbai. Let me know whether dividend received by a shareholder from a cooperative bank is taxable or tax free in his hands.

Sanjeev Kumar

A domestic company is liable to pay dividend distribution tax on distributed dividends in accordance with Section 115-O of the Act. Dividends received by an individual up to ₹1,000,000 on which DDT has been paid by the company, is exempt from taxation in the hands of the shareholder. However, a cooperative bank would not be required to pay DDT and any dividend received from a cooperative bank is taxable in the hands of the shareholder.

I have three savings bank accounts in different banks. Can I claim deduction of aggregate interest from all three accounts or from one account only under Sec 80TTA.

V S Sivakumar

In terms of Section 80TTA of the Act, interest from savings bank account up to a maximum of ₹10,000 is eligible for deduction from the total income. This includes all the savings bank account interest and not restricted to one bank alone. If the aggregate interest from all the savings bank accounts does not exceed ₹10,000, the entire amount would be allowed as deduction. If the interest exceeds ₹10,000, the excess over ₹10,000 would be chargeable to tax.

The writer is Partner, Deloitte India. Send your queries to

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