An allowance is a fixed amount of money or an in-kind benefit given to an employee for the purpose of performing a specific task by an employer. An allowance is also given as a form of compensation for some unusual conditions of employment. An allowance which is usually an addition to an employee’s salary is subject to tax unless it is specifically exempt by law.
Below is the list of allowances subject to and exempt from Income Tax.
|Non- Taxable Allowances||Taxable Allowances|
|Travelling Allowances (as opposed to transportation allowance)||Duty Allowance|
|Station Allowance||Uniform Allowance|
|Entertainment Allowance||Acting allowance|
|Subsistence Allowance||Overtime Allowance|
|Meal Allowance||Housing Allowance|
|Security and Telephone Allowance||Saving Scheme (Banks DIH)|
|Taxable in all Non-Governmental Organisations
||Taxable in all Non-Governmental Organisations
|Leave Entitlement (Vacation Allowance)||Laundry|
Note: All allowances are non-taxable for Judges