Rule 2BB of Income-tax Rules, 1962: Prescribed Allowances Under Section 10(14)
Rule 2BB specifies the allowances eligible for exemption under Section 10(14) of the Income-tax Act, 1961. It distinguishes allowances granted to meet expenses incurred in performing employment duties from certain personal allowances subject to prescribed limits.
1. Allowances under Section 10(14)(i): Rule 2BB(1)
These are special allowances or benefits granted specifically to meet expenses wholly, necessarily and exclusively incurred in performing the duties of an office or employment. Exemption generally applies only to the extent actually spent for the prescribed purpose.
- Travel on tour or transfer: Allowance to meet travel costs incurred on official tour or transfer.
- Daily allowance: Allowance to meet ordinary daily charges during an official tour or journey connected with transfer, when the employee is away from the normal place of duty.
- Conveyance allowance: Allowance for conveyance expenses incurred in performing official duties, provided free conveyance is not supplied by the employer.
- Helper allowance: Allowance to meet expenditure on a helper engaged for performing employment duties.
- Academic, research and training allowance: Allowance to encourage academic, research and training pursuits in educational and research institutions.
- Uniform allowance: Allowance to meet the cost of purchasing or maintaining a uniform worn while performing employment duties.
Explanation: Travel allowance on transfer includes amounts paid towards transfer, packing and transportation of personal effects.
2. Allowances under Section 10(14)(ii): Rule 2BB(2)
Rule 2BB(2) prescribes categories of allowances and the maximum exemption available, subject to the applicable statutory conditions. Key categories historically provided under the rule include:
| Allowance | Prescribed exemption / conditions |
|---|---|
| Children's education allowance | Up to Rs. 100 per month per child, for a maximum of two children. |
| Hostel expenditure allowance | Up to Rs. 300 per month per child, for a maximum of two children. |
| Transport allowance for an employee with specified disability | Up to Rs. 3,200 per month, subject to the applicable disability conditions. |
| Transport-system employee allowance | For eligible employees working in a transport system, 70% of the allowance or Rs. 10,000 per month, whichever is lower, subject to conditions. |
| Allowance for duties in specified difficult, remote, border or high-altitude areas | Amounts vary by prescribed location and category under Rule 2BB(2). |
| Compensatory field-area and modified field-area allowances | Prescribed limits apply, with restrictions on overlapping exemptions. |
| Counter-insurgency allowance | Subject to prescribed eligibility, area and exemption limits. |
| Underground allowance | Up to Rs. 800 per month for eligible employees working in uncongenial, unnatural underground conditions. |
| Highly active field-area allowance | Subject to the prescribed eligibility and limit. |
| Island duty allowance | Subject to specified posting conditions and limits. |
These are selected categories rather than a substitute for the complete statutory table. The precise area classification, qualifying service and notification must be checked before claiming any location-based exemption.
3. Treatment under the old and new tax regimes
Under the old tax regime, Section 10(14) exemptions may be claimed where the relevant statutory conditions are satisfied. Under the concessional new regime under Section 115BAC, most allowances under Section 10(14)(ii), including children's education and hostel expenditure allowances, are not exempt.
Specified allowances under Section 10(14)(i), including official tour or transfer travel, tour-related daily allowance and official-duty conveyance allowance, can continue to qualify under the new regime subject to applicable rules. The specified transport allowance for eligible employees with disabilities is also permitted under the relevant provisions.
4. Practical examples
Official travel reimbursement
An employee receives Rs. 12,000 as an official tour allowance and incurs Rs. 9,500 in qualifying travel expenses. Subject to the statutory conditions, the exemption is limited to Rs. 9,500; the unspent Rs. 2,500 is not exempt merely because it was paid as a travel allowance.
Children's education allowance
An employee receiving Rs. 250 per month per child for two children may, where the old-regime exemption applies, claim up to Rs. 200 per month in total (Rs. 100 per child). The excess is taxable.
5. Documents and compliance
Employees should retain employer allowance statements, official tour orders, bills, vouchers, duty-related expense records and supporting evidence for special location or disability-based exemptions. Employers should classify allowances correctly when computing salary TDS and issuing Form 16.
6. Related legal provisions
Rule 2BB operates with Section 10(14) of the Income-tax Act, 1961 and the applicable provisions of Section 115BAC. It should not be confused with Rule 2A on house rent allowance or Rule 2B on leave travel concession.
For the authoritative provisions and subsequent amendments, refer to the Income Tax Department and the India Code legislative database. Taxpayers should check the law applicable to their particular financial and assessment year, including the transition to the Income-tax Act, 2025 where applicable.