Allowances are fixed periodic amounts, apart from salary, which is paid by an employer for the purpose of meeting some particular requirements of the employee. E.g., house rent allowance, tiffin allowance, transport allowance, uniform allowance, etc.
There are generally three types of allowances for the purpose of the Income-tax Act - taxable allowances, fully exempted allowances and partially exempted allowances.
To know more in detail about allowances and their tax treatment click here.
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