Allowances are a fixed monetary amount paid by the employer to the employees for meeting some particular expenses, whether personal or for performance of his duties. It can be divided into following types:-
A. Allowances, which are fully exempt:-
Citizen of India : Allowances to a citizen of India, who is a Government employee, rendering services outside India.
HC and SC Judges : Allowances given to HC and SC Judges. (Compensatory Allowance or Sumptuary allowance)
Amount received from UNO : Allowances received by an employee of UNO from his employer.
B. Allowances - which are fully taxable:-
C. Allowances partly taxable and partly exempt.
1 :- House rent allowance
Other points:-
1]For the purpose of (c) (i.e. 40% / 50% limit), place of resident is relevant, and not the place of service.
2] Meaning of Salary: Salary = Basic + DA (if forming part of retirement/ provided in terms of employment) + Commission as a percentage of turnover.
2 Allowances, which are exempt to the extent of amount received or the limit specified, (whichever is less).
3. Allowances which are exempt to the extent spent:-
- Conveyance allowances
- Helper allowances
- Uniform allowances
- Travelling allowances/Transfer allowances
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