Special Allowances for Advisers Under President's Rule Taxable as Salary; Section 80-GG Claims Possible for Rent Payments.

The circular addresses the taxability of special allowances provided to Advisers to the Governors of states under President's rule. These allowances, given in place of free furnished housing and limited personal use of official cars, are considered taxable as salary income under the Income Tax Act. Officers are instructed to note this. Additionally, if the Adviser pays rent from the special allowance instead of receiving free accommodation, a claim under section 80-GG may be considered, applicable from the assessment year 1976-77 onwards.

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