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Important Allowances

S.NO Allowance Name  Exempt up to
1 Children Education Allowance  Rs.100 p.m. per child up to a maximum of 2 children.
2 Hostel Expenditure Allowance  Rs.300 p.m. per child up to a maximum of 2 children.
3 Transport Allowance  1600 p.m.     Now it is fully taxable
4 HOUSE RENT ALLOWANCE (HRA) Least of following 3 is exempt 
Actual HRA Recd.
Rent paid-10%*(Basic +DA )
40%*(Basic + DA)                                                            (50% in Metro Cities)


Other Allowances

 S.No  Allowance Name Exempt upto
5 Transport Allowance for Blind/Handicapped Employees Rs.1600 p.m . (From 2015-16 FY 3200 p.m.)
6 Tribal Area , Scheduled Area / Agency Area Allowance Rs.200 p.m. 
7 Special Compensatory Hilly Area Allowance Or High Altitude Allowance  Varies from Rs.300 to Rs.7000 p.m.
8 Border Area Allowance Varies from Rs.200 to Rs.1300 p.m.
9 Compensatory Field Area Allowance  Rs.2600 p.m.
10 Compensatory Modified Field Area Allowance  Rs.1000 p.m.
11 Counter Insurgency Allowance Granted To Members Of Armed Forces  Rs.3900 p.m.
12 Transport Employees Working In Any Transport System  70% of the allowance , maximum Rs.10000 p.m.
13 Underground Allowance  Rs.800 p.m.
14 High Altitude (Uncongenial Climate) Allowance Altitude of 900. ft. to 15000 ft. Rs. 1060 p.m. and altitude above 15000 ft.  Rs.1600 p.m.
15 Special Compensatory Highly Active Field Area Allowance Granted To Members Of Armed Forces Rs.4200 p.m. 
16 Island (Duty) Allowance  Rs.3250 p.m.

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.