Partly Taxable Allowances

• Transport  Allowance

Any amount paid to employee for expenses incurred on commuting between residence and place of duty

Exemption: Rs. 1,600 per month (In case of blind, deaf, dumb and handicapped employees Rs.3, 200 per month) is exempted

• House Rent Allowance

Any allowance paid by employer to pay employee’s rented accommodation

Exemption: Least of following three is exempted:-

1. Actual HRA received
2. 40 % of salary ( 50% if house situated in Mumbai, Calcutta, Delhi or Madras)
3. Actual rent paid minus 10% of salary (Salary is Basic +DA or Basic as per company’s salary structure)

Note:

1. HRA is fully taxable if employee is living in his own house or if he don’t pay any rent.
2. Pan number of land lord is required if house rent exceeds Rs. 1 lakh

• Conveyance Allowance

Any allowance paid by employer to meet expenses incurred on conveyance while performing office duties

Exemption: Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Children Education Allowance

It is reimbursement for educational expenses incurred for two children

Exemption: Up to Rs. 100 per month per child up to 2 children is exempted

• Hostel Expenditure Allowance

Any allowance granted to an employee to meet the hostel expenditure of his child

Exemption: Up to Rs. 300 per month per child up to 2 children is exempted

• Uniform Allowance

In this case, according to dress code of the office, an employee can claim uniform reimbursement for formal clothes purchased for office wear. Does not necessary for workers in factory, it’s for all employees who have to follow certain dress code in office and its maintenance.

Exemption: Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Research Allowance

It is granted for encouraging the academic research and other professional pursuits.

Exemption- Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Helper/Assistant Allowance

Exemption- Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Allowance to meet travel cost and transfer

Exemption- Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Entertainment Allowance Government employees

Least of the following is exempt from tax:

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisite)

c) Actual entertainment allowance received

• Daily Allowance

Daily allowance is given to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty

Exemption: Exempted to the extent of expense incurred for official purpose (Varies from company to company as per their policy)

• Tribal area allowance

Allowance is given to employees who worked in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa

Exemption- Exempted up to Up to Rs. 200 per month

• Underground Allowances

Underground allowances granted to employees working in unpleasant, unnatural climate in underground mines

Exemption: Exempted up to Up to Rs. 800 per month

• Border area allowance Remote Locality or allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations)

Exemption: Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300 per month

• High Altitude Allowance ( For armed forces)

It is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)

Exemption:

a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet)

b) Up to Rs. 1,600 per month (for altitude above 15,000 feet)

• Highly active field area allowance ( For armed forces)

  Subject to certain conditions and locations

  Exemption: Up to Rs. 4,200 per month

• Island Duty Allowance ( For armed forces)

 It is granted to members of armed forces in Andaman and Nicobar and Lakshadweep  group of Island (Subject to certain conditions and locations)

Exemption: Up to Rs. 3,250 per month