Taxable and Tax Exempted Salary Allowances

There are two types of Salary which gives to employee i.e. 1. Admissible Basic and 2. Admissible Allowance with Other Allowance monthly or annually. As per Income Tax Acts, there are some allowances which are taxable if no specific exemption is given under the income tax rules.There is a list of almost all the allowances to the salary holder and income tax treatment to it.

House Rent Allowance (HRA):
House rent allowance is exempted form the view of income tax act u/s 10(13A). Minimum of these are exempted from the view of house rent allowance received from the following.

• House rent actually received.
• House rent paid – 10% of the salary.
• 50% of the salary if the house is on four Metros.
• 40% of the salary if the house situated on other places. More Details about House Rent Allowance and HRA Exemption Click Here

City Compensation Allowance:

• the city compensation allowance is fully taxable.

Foreign allowance:

• Foreign allowance is exempt if the amount paid outside India by the government to Indian citizen for his services outside India.

Fixed medical allowance:

• Employees get fixed medical allowance for the different medical expenses to his or his family. It is fully taxable from the income tax point of view.

Project Allowance:

• Project Allowances are generally taxable but for the SUPREME COURT AND HIGH COURT JUDGES they are not taxable and exempted.

Servant Allowances:

• If the servant is used for household then it is taxable but if used for office purposes exempted from income tax.

Transport allowances:

• Transport expenses allowances are the allowances to meet the expenses to the route of home to office and office to home expenses. They are exempted from the income tax point but to the maximum of 800 Rupees per month.

Transfer Expenses:

• If an employee’s transfer from one place to other, the allowance for this transfer is exempted from the income tax including the leave on the office for this transfer as well as personal expenses if any.

Conveyance allowances:

• Conveyance is the daily requirement of the office and for the employee any expenses on conveyance for the office work is fully exempted.

Uniform Allowance:

• Fully exempted for office use only.

Children Education Allowances:

• one hundred rupees per child per month and exemption is for maximum for 2 children. If the children are in hostel there is an addition of 300 rupees per month exemption for maximum of 2 children.

Allowance granted to employee working in transport system where no daily allowance has not been allowed to meet daily expenses ,done to meet his personal expenses during duty performance from one place to other place :70 % of such allowable exempted maximum up to 6000 per month

There are some allowances to encourage research and academic performances and the exemption is full for office purposes.

Exemption rates are sometime differ for transport and other allowances for one palace to other such as hill area or border area or special area where life is not such easy, the rate of exemption are somewhere higher.

Other allowances are generally taxable.