Taxable allowances
Taxable allowances, Under the Income Tax regulations in India, certain allowances are subject to taxation. Some of the commonly taxable allowances include:
Dearness Allowance (DA):
DA is an allowance provided to employees to offset the impact of inflation. It is fully taxable.
House Rent Allowance (HRA)
HRA is an allowance provided by employers to employees to assist with their rental accommodation expenses. It is designed to help employees meet the cost of renting a home. It is partially taxable, and the extent of exemption depends on factors like salary, location of residence, and HRA received.
City Compensatory Allowance (CCA):
CCA is grant to employees working in metropolitan or large cities. It is fully taxable.
Overtime Allowance:
Overtime allowance is offer to employees who work beyond their regular working hours. It is fully taxable.
Fixed Medical Allowance:
Fixed medical allowance is given to employees to assist with medical expenses. It is taxable unless the employee can substantiate medical expenditures.
Leave Travel Allowance (LTA):
LTA is provided to employees to cover travel expenses during their leave. It is partially taxable, and the extent of exemption depends on factors like mode of travel, number of family members traveling, and distance cover.
It’s important to note that the taxability of allowances can vary based on employment nature, contractual terms, and the regulations outlined in the Income Tax Act.
To visit:https://www.incometax.gov.in
