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Taxable allowances refer to a part of a worker’s salary which is taxable as per the Income Tax Act. An allowance implies a predetermined amount of money a salaried employee receives from his employer to satisfy specific types of outlays out and beyond salary.
Allowances are taxable and are included in the salary, except for those for which different sections of the Income-tax Act have been provided. It is a financial advantage offered to an employee by the employer as a salary component, which hence, becomes a part of his salary structure. Certain allowances have been made fully taxable, others partially taxable, while some have been made tax-free under income tax laws.
Allowances mean a fixed amount of money offered by an employer to the employee as compensation for a particular type of outgo. The allowance is furnished out and above the salary reimbursed to the employee. For instance, certain companies provide overtime benefits to employees when they work beyond usual working hours or stay back in the office for work in order to complete a particular project or meet seasonal demand.
Besides, over time, several other allowances are provided to salaried workers. These allowances are regarded as a part of salary by the Income Tax Department and are subject to taxation. However, there are certain allowances that enjoy tax benefits under the exemptions mentioned in various segments of the Income Tax Act.
Taxable allowances refer to a part of a worker’s salary which is taxable as per the Income Tax Act. An allowance implies a predetermined amount of money a salaried employee receives from his employer to satisfy specific types of outlays out and beyond salary.
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