Allowance is defined as a fixed quantity of money or other substance given regularly in addition to salary for meeting specific requirements of the employees. As a general rule, all allowances are to be included in the total income unless specifically exempted. Exemption in respect of following allowances is allowable to the exent mentioned against each :-
House Rent Allowance:- Provided that expenditure on rent is actually incurred, exemption available shall be the least of the following :(i) HRA received.Type of Allowance | Amount exempt |
(i) Special Compensatory Allowance for hilly areas or high altitude allowance or climate allowance. | Rs.800 common for various areas of North East, Hilly areas of UP, HP. & J&K and Rs. 7000 per month for Siachen area of J&K and Rs.300 common for all places at a height of 1000 mts or more other than the above places. |
(ii) Border area allowance or remote area allowance or a difficult area allowance or disturbed area allowance. | Various amounts ranging from Rs.200 per month to Rs.1300 per month are exempt for various areas specified in Rule 2BB. |
(iii) Tribal area/Schedule area/Agency area allowance available in MP, | Rs.200 per month. |
(iv) Any allowance granted to an employee working in any transport system to meet his personal expenditure during duty performed in the course of running of such transport from one place to another place. | 70% of such allowance upto a maximum of Rs.6000 per month. |
(v) Children education allowance. | Rs.100 per month per child upto a maximum 2 children. | |
(vi) Allowance granted to meet hostel expenditure on employee Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated! |