Law: Income Tax Rules, 1982

Section: 3(2)(a),4,R.3(2),Rule3(1)

(a) Income Tax Rules, 1982----Rr. 3(2)(a) & 4---Valuation of perquisites, allowances and benefits--¬House rent---Rules 3(2)(a) & 4 interpreted and explained---Basic salary as defined under R.3(2) itself includes all the allowances except for those stated in SA(i)---Such basic distinction is to be kept in mind while determining the house rent allowance receivable in cash and the corresponding exemption--¬Technical and indexation pay etc. have to be included to arrive at the minimum of time salary for calculating the house rent---Only the minimum of time scale of the assessee has to be taken as determining factor. Rule 3(1) of Income Tax Rules, 1982, states that the value of perquisites, allowances and benefits includable in the income chargeable under the head "salary" shall be determined in accordance with the provisions of Rule 4 to Rule 18 wherever applicable. Sub-rule (2) of Rule 3 defines "basic salary" for the purpose of determining the value of perquisites, allowances and benefits. A bare reading of the provision indicates that in Rule 4 another term "minimum of the time scale of basic salary" has been used which cannot be confused with the terms "basic salary" as defined in Rule 3(2) of the said Rules. Also the proviso to Rule 4 leads us to a definite conclusion that the term "basic salary" and "minimum of the time scale of basic salary" are two different terms. While basic salary has been defined in Rule 3(2)(a) of these Rules, the term "time scale" has not been defined in these Rules. However, Rule 9(31)(a)-of Fundamental Rules, Section 1, Chapter II defines a time scale in the following words:--- "Time scale pay means pay which, subject to any conditions prescribed in these rules, rises by periodical increments from a minimum to maximum. It includes the class of pay hitherto known as progressive." Therefore, a time scale refers to a scale of pay that generally is not static and has a nexus with upward movement of salary with the flux of time and this movement is determined by steps stated in terms of amount of money to be added at the end of a specific period. Rule 4 again makes it abundantly clear that it is the "minimum of time scale" of the…

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