The Non-Gazetted Government Officers’ Association, Andaman and Nicobar Islands has demanded exemption of Islands Special Duty Allowance (ISDA) from the income tax calculation of government employees working in Andaman and Nicobar Islands. In a letter sent to the Chairman, Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India, New Delhi, Shri D. Ayyappan, General Secretary of the Association said that government employees working in the Andaman and Nicobar Islands are being paid Island Special Duty Allowance ranging from 12 ½% to 25% depending upon the area of posting. This Allowance was introduced to compensate for the unfavourable working condition under which the government employees are working here. Due to unfavourable climatic condition, backwardness, high cost of living prevailing here, etc were some of the grounds for accepting the demand for this Allowance by the Govt. of India.
He has pointed out that this Allowance has been included in the taxable income while calculating income tax. Though this Allowance can be classified as compensatory in nature taking into account the high cost of living and other unsuitable conditions prevailing in the Andaman and Nicobar Islands, the same has not yet been excluded from the taxable income. He further pointed out that defence personnel posted in these islands are exempted from paying income tax on this Allowance.
Hence, he demanded to examine this matter and exempt the Island Special Duty Allowance from Income Tax treating this Allowance as compensatory in nature, which will be of great relief to thousands of government employees working in the Andaman and Nicobar Islands.
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