Relocation Allowance: How You Can Maximise When You Relocate For Work?

The relocation allowance in India is a crucial reimbursement that reduces the financial stress of work-related shifting. It is partly exempt from income tax but depends on proof of actual expenses. While relocation expenses paid by the employer for moving essentials are exempt, perks like rent or school fees remain taxable.

Whether it is a relocation allowance in Accenture for IT professionals, the benefit ensures smoother job transfers. Employees should maintain receipts and understand whether a relocation allowance is taxable or not.

Let’s learn this allowance better, explore its tax exemptions, and much more.

What Is A Relocation Allowance?

A relocation allowance, also called a one time relocation allowance or transfer allowance, is a monetary benefit given by employers to employees to cover additional expenses incurred due to relocation for work purposes.

Such expenses may include transportation of household items, temporary accommodation, travel costs for the employee and family, etc. The relocation allowance for employees is meant to reimburse them fairly for out-of-pocket expenses due to the mandated relocation.

What Expenses Qualify For Relocation Allowance Exemption In India?

The Income Tax Rules specify the costs eligible for exemption under relocation allowance for employees:

• Packing and moving household goods.

• Travel expenses for self and family.

• Temporary accommodation for up to 15 days.

• Vehicle re-registration charges.

To claim these, bills and receipts must be submitted. Many IT firms require employees to submit detailed expense proofs.

Key Things To Note About Relocation Allowance Taxability In India

To summarise, the relocation allowance for employees granted by employers is partly tax-exempt to the extent of actual and proven relocation expenses. Proper documentation is important to avail of this exemption. While common shifting charges are not taxed, some benefits like long-term housing become part of the taxable salary as perquisites. Companies must specify taxable and non-taxable components to avoid disputes.