An allowance is mostly outlined because of the fastened amount of cash that is given often additionally to wage for the aim of meeting some specific demand connected with the service rendered by the worker or as compensation for uncommon conditions of that services.
Following are the ten commonest allowance which each and every salaried person have to be compelled to apprehend and use it for tax designing for the yr 2017-18 (AY 2018-19).
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Section
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Particulars
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1
|
10(13A)
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House rent allowance (HRA)Least of the following is exempted-(i) Actual HRA received (ii) 40% of salary (50% in case of HP in Mumbai, Kolkata, Delhi, Chennai) (iii) Rent paid less 10% of salary* * salary represent Basic+DA (if part of retirement benefit) |
2
|
10(14)(ii)
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Child education allowanceLower of the following are exempted-i) Actual allowance received ii) 100/- pm per child up to a maximum of 2 children. |
3
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10(14)(ii)
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Child’s Hostel Expenditure allowanceLower of the following are exempted-i) Actual allowance received ii) 300/- pm per child up to a maximum of 2 children. Use the calculator to Calculate Child’s education and hostel Allowance. |
4
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10(14)(ii)
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Transport Allowance to EmployeesLower of the following are exempted-i) Actual allowance received ii) 1600/- pm or Rs.3200/- pm for blind or deaf and dumb May use the calculator! From FY 2018-19, this allowance is not available. |
5
|
10(14)(ii)
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Underground Allowance For MinesLower of the following are exempted-i) Actual allowance received ii) 800/- pm (working in uncongenial, unnatural climate in underground mines) |
6
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10(14)(i)
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Conveyance allowance (Not a Transport Allowance)To meet the expenditure on conveyance in performance of duties of an office.Lower of the following are exempted- i) Allowance received ii) Amount utilized for the conveyance |
7
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10(14)(i)
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Uniform allowanceLower of the following are exempted-(i) Allowance received (ii) Amount utilized for the conveyance |
8
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10(14)(ii)
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Special compensatory Allowance(Hilly areas)(i) Siachen area of Jammu and Kashmir Rs.7000/- pm(ii) All places located at a height of 1,000 meters or more above the sea level Rs.300/- pm (iii) Specified Areas Rs.800/- pm |
9
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10(14)(ii)
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Border area allowancesAmount exempt from tax varies from Rs. 200/- pm to Rs. 1300/- pm |
10
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10(14)(ii)
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Tribal area allowance[Given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa]Amount exempt from tax is Rs. 200/- pm |
Sl no
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Section
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Allowances
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10(14)
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Traveling allowance/Transfer allowanceExpenses on travel, tour or transfer shall be exempted.The exemption will be limited to the lower of– a. Actual Expenditure b. Amount of allowance provided by the employer |
|
2
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10(14)
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Daily AllowanceTo meet the ordinary daily expenditure incurred by the employee on account of his absence from the normal place of duty, due to tour or journey in connection with his transfer.The exemption will be limited to the lower of– a. Actual Expenditure b. Amount of allowance provided by the employer |
3
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10(14)
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Helper/Assistant AllowanceTo meet the expenditure on a helper engaged for performing the official duty.The exemption will be limited to the lower of– a. Actual Expenditure b. Amount of allowance provided by the employer |
4
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10(14)
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Research Allowanceto meet the expenditure on academic research and other professional pursuitsThe exemption will be limited to the lower of– a. Actual Expenditure b. Amount of allowance provided by the employer |
Example:
Name of allowance
|
Amount of allowance (A)
|
Actual expense
(B) |
Exempted
(C)[Lower of A and B] |
Taxable
[A-C] |
Traveling allowance
|
10000
|
12000
|
10000
|
0
|
Conveyance allowance
|
18000
|
20000
|
18000
|
0
|
Daily allowance
|
6000
|
6600
|
6000
|
0
|
Helper allowance
|
3000
|
3400
|
3000
|
0
|
Research allowance
|
8000
|
11000
|
8000
|
0
|
Uniform allowance
|
3000
|
4500
|
3000
|
0
|
Taxable allowance
|
0
|
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Source: Rule 2BB of section