Non-taxable allowances are an additional amount of money given to employees on their regular salary. This financial advantage can cover expenses related to their jobs, such as travel or accommodation costs. The allowance is not considered taxable income, so the employee does not have to pay taxes.
Fully exempt allowances are a type of allowance that can be claimed without providing any information about the expenses being claimed.
Some allowances are fully exempt – the first is for certain disability-related expenses, and the second is for travel costs related to caring for a dependent.
The disability-related expenses which can be claimed as a fully exempt allowance include:
The travel costs, which can be claimed as a fully exempt allowance, relate to journeys made specifically to care for a dependent.
When employees of the government who are working abroad are paid allowances then those allowances are fully exempted from the Income tax bracket.
Sumptuary allowance which is paid to judges of Supreme court and High court are fully exempted from the Income Tax bracket.
The allowance paid to the employees of UNO are exempted from the Income tax bracket.
The compensatory allowance paid to judges is fully exempted under the Income tax bracket.
Any allowance granted to meet the expenditure on purchase or maintenance of uniform for wear during the duties of an office or employment. This is exempted to the limit of the actual amount spent on uniform.
Helper allowance is generally provided to an employee to meet the expenditure incurred on a helper when such helper is engaged for performing official duty.
Daily allowance, Research/ Academic allowance, Conveyance allowance, allowances paid to government employees outside India and so on.
There are several benefits to receiving a non-taxable allowance. Here are some of them: