Allowances are periodic payments that the employer makes to the employees to help them meet specific requirements of the employee as tiffin allowance, servant allowance, transport allowance, and uniform allowance. Such allowances are given over and above the salary and are included in the total salary except in case it is specifically exempted.
Allowances can be fully taxable, partially taxable, or fully exempt.
Here are a few examples of the most common allowances -
- House rent allowance
- Leave travel allowance
- City compensatory allowance
- Children education allowance
- Tribal area allowance
- Border area allowance