Non-taxable allowances: what are they?
Employees are exempt from paying taxes on non-taxable allowances. Fully exempted allowances is another name for them. Employees receive these allowances as additional pay for expenses associated with their jobs, such as travel and lodging.
Although they are an essential part of the pay, non-taxable allowances are completely tax-exempt. This suggests that taxes are deducted from the total salary while computing them.
Stated differently, incomes that do not contribute to the total income or are subject to income tax are considered entirely exempt or non-taxable.
Allowances That Are Completely Exempt
Fully exempt allowances are those that are completely exempt from taxes. The list of various services that are completely tax-exempt is provided under the Income Tax Act of 1961.
Here are a few instances:
- The pay that judges earn under Article 222(2) of the Constitution includes allowances for teachers and professors from SAARC member states.
- Allowance for house rent
- Allowance for education
- Allowance for travel
- Allowance for conveyance
- Equal allowance
- Allowance for compensation
- Allowance that UNO employees receive
