Allowance is a fixed/flat amount given to the employee
Some of the allowance are fully exempt. However some are exempt up to some limits. However all other remaining are fully taxable.
Types of Allowances
- Fully Exempt Allowances for All
- Fully Exempt Allowances for Certain People
- Allowance Exempt upto Some Limit
- Taxable Allowances
We have to remember the first 3 kinds of allowances.
All other alllowance except the above 3 are fully taxable allowances
Lets study these in detail