Allowance generally received to salaried persons and treatment Under Income Tax Act & Rules.
Allowance: means Fixed amount of money or other substance given monthly in addition to salary to meet the particular type of expenditure.
Treatment:Allowances are part of salary and taxable in hands of the assessee if no specific exemption is given under the Income Tax Act/Rules
I am trying to cover most of the allowances but this is not a exhaustive list.
- HRA(House Rent Allowance ) house rent allowance is exempted u/s 10(13A) of the income tax act.Least of the following is exempted from HRA Received
- HRA received
- House rent paid minus 10 % of salary(salary means basic plus DP plus DA if term of employment so provides)
- 50% of salary(same meaning as above)in case of rented house situated in Bombay,Madras,Delhi or Calcutta
- 40 % of salary ,if rented house is situated in any other places