An allowance is a set sum of money that businesses give their workers to cover specific expenses over and above their base pay. For instance, when workers put in more hours, companies give them overtime compensation in addition to their base wage. In a similar vein, there are other more benefits included in the wage.
Allowances That Are Taxable
Allowance for dearness
Allowance for entertainment
Allowance for overtime
City compensatory allowance
Allowance for medical care
Temporary allowance
Project budget
Tiffin/allocation for meals
Equal allowance
Allowance in cash
Allowance for non-practicing
Allowance for the Warden
Allowance for servants
Partially Taxable Allowances
House Rent Allowance (HRA)
Actual HRA is received by the employee from the employer
Rent paid less than 10% of (Basic DA)
40% of the basic salary for non-metros and 50% of basic salary for metro cities.
Leave Travel Allowance (LTA)
Allowance for Children’s Education
Hostel Expenditure Allowance
Fixed medical allowance
Conveyance allowance above ₹ 19,200 per annum under section 10 (14) (ii) of the income tax act
Entertainment allowance – deduction of 1/5 of salary or ₹ 5,000 whichever is less under section 16 (ii) of the income tax act
Conveyance allowance up to ₹ 1,600 per month or ₹ 19,200 per annum
Payments to government employees posted abroad
Books and Periodicals allowance
Gadgets
Gifts in kind
Recreational and medical facilities
Allowance for UN employees
Sumptuary allowance paid to judges of Supreme Court and High Courts
Compensatory allowance paid to judges of Supreme Court and High Courts
