Meaning of allowance
Allowance is generally defined as fixed quantity of money or other substance given regularly in addition to salary for the purpose of meeting some particular requirement connected with the services rendered by the employee or as compensation for unusual conditions. It is fixed, pre-determined and given irrespective of actual expenditure
Under income tax act for exemption purpose allowances are categorized under three heads. One of the commonly used category is allowances which are based on actual amount expended by an employee. Here an attempt is made to understand types & nature of such allowances and per se the extent of exemption available for these allowances.
Special allowance prescribed as exempt under section 10(14)
When exemption depends upon actual expenditure by the employee – The following allowances are exempt under section 10(14) to the extent the amount is utilised for the specified purpose for which the allowance is received . In other words, in the cases given below the amount of exemption under section 10(14) is_
1. The amount of the allowance ; or
2. The amount utilised for the specific purpose for which allowance is given,
whichever is lower .
Exemption is available on the aforesaid basis in the case of following allowances-
| Name of the allowance | Nature of allowance |
| Travelling allowance/transfer allowance | Any allowance (by whatever name called) granted to meet the cost of travel on tour or on transfer(including any sum paid in connection with transfer, packing and transportation of personal effects on such transfer). |
| Conveyance allowance | Conveyance allowance granted to meet the expenditure on conveyance in the performance of duties of an office
Note please.: Expenditure for covering the journey between office and residence is not treated as expenditure in performance of duties of the office and, consequently, such expenditure is not exempt from tax under this section. This allowance is covered separately under “Transport allowance” where a fixed exemption upto Rs 1600 per month is given to such allowances in case of all employees. However, wef from A.Y 2019-20 this amendment has been withdrawn and in lieu of it a standard deduction of Rs 40,000 shall be allowed u/s 16 Example: Conveyance allowances given to an employees for travelling done by employee for attending income tax hearing for presenting income tax hearing |
| Daily allowance | Any allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. |
| Helper allowance | Any allowance (by whatever name called) to meet the expenditure on a helper where such helper is engaged for the performance of official duties. |
| Research allowance | Any allowance (by whatever name called) granted for encouraging the academic research and other professional of official duties. |
| Uniform allowance | Any allowance (by whatever name called) to meet the expenditure on the purchase or maintenance of uniform for wearing during the performance of duties of an office.
Pls. note: Benefit under this allowance can be taken only when a specific uniform is prescribed for office duties. |
As stated earlier, the amount of exemption in the above cases is the amount of allowance or the expenditure incurred for the specific purpose for which allowance is given,whichever is lower.
Kindly attention:
It is not open to the Assessing Officer to call for the details of expenses actually incurred by the assesse unless the allowances are disproportionately high compared to the salary received by the assessee or unreasonable with reference to the nature of the duties performed by the assessee.
So as far as allowance given are in normal proportion to the gross salary given to employee, employee need not to maintain the account and kept documents to proof is stand of actual expenses incurred for the aforesaid purpose. A simple declaration is enough to claim such exemption.
Case study
During the previous year 2018-19, the following allowances are given to X by the employer company –
| Nature of Allowance | Amount Of Allowance | Amount Actually Spent | Amount Chargeable |
| Travel allowance for official purpose | 36,000 | 32,000 | 4,000 |
| Travel allowance given at the time of transfer of Mr X from Delhi | 40,000 | 41,000 | – |
| Helper allowance for engaging helper for official purpose | 68,000 | 64,000 | 4,000 |
| Research Allowance | 1,00,000 | 90,000 | 10,000 |
| Uniform allowance for official purpose | 18,000 | 17,000 | 1,000 |
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(Republished with Amendments)
Sir, I am working in PSU in Mumbai. I want to avail tax exemption under Section 10(14) for Domestic Helper/Assistant and Driver. What is documentary proof required for claiming the exemption?
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How much amount i can show in u/s 10(14) ii .
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Hi, i am a government medical college teacher since 20 years. Since so many years i ahve been receiving post graduate allaowance, which i claim every year and i have got it. Can i still claim my PG allowance of 30000 rs and MTA of 10000 this year too, inspite of hike in standard deduction. My CA is nt claiming this in view of increased tandard deduction. Please help.
explain the difference in bet sec 10 (14) and 80 C in relation to exemption of tution fee
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Plz reply soon
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WHETHER HILL COMPENSATRY ALLOWANCE AND WINTER ALLOWANCES EXCEMPTED FROM INCOME TAX AND UNDER WHICH SECTION OF INCOME TAX RULE
I presently working at Academy and preforming the duty of Instructor and i draw the Training allowance monthly basis on amount of Rs. 9000/- please reply its amount exempt in tax or other wise.
I am Senior Citizen and retired Bank Pensioner. I am getting reimbursement of Medical Expenses to the extent of Rs.4000 every year. Whether it is exempted from income tax during the financial year 2018-19. please guide me suitably.
WHETHER HILL ALLOWANCE AND WINTER ALLOWANCES EXCEMPTED FROM INCOME TAX
Sir,
I am an employee of Arunachal Pradesh receiving Rs 3150/- as SCA(Special compensatory Allowance) per month. My question is :-
At what extent fully or partially my SCA is to be exempted from my individual salaried income tax for the financial year 2018-19?
respect sir i am working as loco pilot Indian railway
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Nicely Explained, Is there any maximum limit exemption under section 10(14).
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Incomplete information u/s 10(14).
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Sir,
I will become a senior citizen on 10.04.2017 (60 years). Whether I am eligible for tax slabs applicable for senior citizens during the F.Y.2017-18
sir where i have show this amount while efiling ex.80c,80ccetc
Hello Sir I am Poonam Rohila , if i travel in my personal car, so can i apply for Leave travelling allowance , what bills can i show at this time
I was sponsored by Company A in 2014 for 1 year part time academic program under a 2 year bond, now i want to join company B which is ready to pay this amount to me so that i can payback to company A.
Company B is deducting TDS on the payout and not treating it as reimbursement under Section 10 Rule 2BB since the fee was paid to the academic institute directly by company A.
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Please guide me in this case.
NICE ARTICLE