What is the hostel expenditure allowance? #
Employees kid’s educational-related expenses are many and one of them is their hostel expenditures. Hostel expenditure allowance is included in salary packages as a marginal relief for employees to get an exemption for their kid’s hostel expenses.
Hostel expenditure allowance is exempted as a fixed amount up to a maximum of 2 children for an employee. Unlike other allowance exemptions, it is not applied based on the actual expenditure. The total exemption under the hostel expenditure allowance can not exceed more than 7200 per year per employee and this will be restricted based on the actual allowance.
Hostel expenditure allowance paid to employees for their children’s hostel expenditure is exempted up to rupees 300 per month per child and up to a maximum of two, as per Section 10 (14) of the Income-tax Act, 1961, and any excess amount paid is fully taxable.
