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) Station Allowance Entertainment Allowance Subsistence Allowance Meal Allowance Security and Telephone Allowance
Taxable in all Non-Governmental Organisations
Leave Entitlement (Vacation Allowance) Severance Benefit Hardline |
Duty Allowance Uniform Allowance Acting allowance Overtime Allowance Housing Allowance Saving Scheme (Banks DIH)
Taxable in all Non-Governmental Organisations
Laundry |
