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Allowances Taxability

Table of Contents

Fully Taxable Allowances:

Dearness Allowances, City Compensatory allowance, Medical Allowance, Tiffin allowance, Servant allowance, Project allowance, Overtime allowance, Warden Allowance, Family Allowance, Domestic Servant Allowance

Partly Taxable Allowances:

  • Allowances which is received by employee for meeting expenses related to the employer’s business is not taxable in hands of employee to the extent it is actually incurred by employee. This includes allowances such as Travelling Allowance, Conveyance Allowance, Helper Allowance, Uniform Allowance etc.

Exempt for certain limits

For the following allowances, the deduction is limited to the amount mentioned

Transport allowance to employees of transport system         (i) 70% of such allowance

(ii)Rs. 10,000 p.m

Whichever is lower

Tribal Area Allowances( in states of MP, Tamil Nadu, UP, Karnataka, Tripura, Assam, West Bengal, Bihar, Orissa                                                                                  Rs. 200 p.m

Transport Allowance                                                                   Rs. 1600 p.m (Rs. 3200 p.m in case of blind or orthopaedically handicapped employees) Rs. 800 and Rs. 1600 respectively upto financial year 2014-15  Notification

Underground allowance                                                          Rs. 800 p.m

Children Education allowance                                                Rs. 100 p.m per child for maximum 2 child

Hostel Expenditure allowance                                            Rs. 300 p.m per child for maximum 2 child

Wholly exempt allowances

  • Allowances to Indian citizen who is a government employee and rendering services outside India
  • Allowances to High Court judges.
  • Sumptuary Allowance to judges of High Court and Supreme Court.
  • Allowances to employee of UNO

 

Rohit Pithisaria

I am a Chartered Accountant based in Jaipur (Rajasthan). Started TaxAdda in 2011 as a blog and now providing various service related to GST and Income Tax to the client all over India. Also writing actively for TaxAdda blog and our e-Magazine on GST & Income Tax.

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