Allowances

MEDICAL ALLOWANCE

It is a fully taxable amount provided to employees. Employees can claim a tax benefit of up to Rs. 15,000 under medical reimbursement. They have to provide supporting documents of payments like Bills for medicines, checkup, medical tests, treatments.

Employee can claim for self, spouse, dependent children and parents.

Even if an employer provides a higher medical allowance, the employee can claim a tax exemption of max Rs 15000/- subject to proper bills.

CONVEYANCE ALLOWANCE

Conveyance allowance( Transport Allowance) is provided offered to employees of a company to compensate for their travel from their residence to workplace location and back.

The tax exemption limits are Rs.1,600 / per month or Rs.19,200 per year .

For orthopedically challenged the amount is Rs 3200 / per month or Rs 38400/- per year,

The employee need not provide any proofs of travel. If any employer provides nore than 1600 /- per month as travel allowance then only Rs 1600/- will be exempt, the rest would be taxable.

EDUCATION ALLOWANCE

Fixed education allowance received from employer is exempted from tax to the extent of Rs. 100 per month for maximum of 2 children

Allowances paid for hostel is exempt to the extent of Rs. 300 per month for maximum 2 children.

UNIFORM ALLOWANCE

Certain Organizations need employee to wear uniforms to work. E.g Retail Stores , Factories. Hence the employer gives employees allowance for the purchase and maintenance of the uniform.

Taxability

The amount exempt shall be

  • Amount received by the employer
  • Amount actually spent by the employee

CHILDREN & HOSTEL ALLOWANCE

Fixed education allowance received from employer is exempted from tax to the extent of Rs. 100 per month for maximum of 2 children.

Allowances paid for hostel is exempt to the extent of Rs. 300 per month for maximum 2 children.

Some companies have a component called as other allowance or Adhoc allowance, Special allowance.

This amount is a fully taxable amount. It is that amount which does not fall under any other component like medical, travel, uniform etc.