10 common allowance for Salary Person FY 2017-18 (AY 2018-19)

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 allowances

An allowance is generally defined as the fixed quantity of money which is given regularly in addition to salary for the purpose of meeting some particular requirement connected with the service rendered by the employee or as compensation for unusual conditions of that services.

Following are the 10 most common allowance which every salaried person need to know and use it for tax planning for the financial year 2017-18 (AY 2018-19).

 

#. Section Particulars
1 10(13A)

House rent allowance (HRA)

Least of the following is exempted-

(i) Actual HRA received

(ii) 40% of salary (50% in case of HP in Mumbai, Kolkata, Delhi, Chennai)

(iii) Rent paid less 10% of salary*

* salary represent Basic+DA (if part of retirement benefit)

2 10(14)(ii)

Child education allowance

Lower of the following is exempted-

i) Actual allowance received

ii) 100/- pm per child

up to a maximum of 2 children.

3 10(14)(ii)

Child’s Hostel Expenditure allowance

Lower of the following is exempted-

i) Actual allowance received

ii) 300/- pm per child

up to a maximum of 2 children.

Use the calculator to Calculate Child’s education and hostel Allowance.

4 10(14)(ii)

Transport Allowance to Employees

Lower of the following is exempted-

i) Actual allowance received

ii) 1600/- pm or Rs.3200/- pm for blind or deaf and dumb

May use calculator!

From FY 2018-19, this allowance is not available.

5 10(14)(ii)

Underground Allowance For Mines  

Lower of the following is exempted-

i) Actual allowance received

ii) 800/- pm

(working in uncongenial, unnatural climate in underground mines)

6 10(14)(i)

Conveyance allowance (Not a Transport Allowance)

To meet the expenditure on conveyance in performance of duties of an office.

Lower of the following is exempted-

i) Allowance received

ii) Amount utilized for the conveyance

7 10(14)(i)

Uniform allowance

Lower of the following is exempted-

(i) Allowance received

(ii) Amount utilized for the conveyance

8 10(14)(ii)

Special compensatory Allowance(Hilly areas)

(i) Siachen area of Jammu and Kashmir Rs.7000/- pm

(ii) All places located at a height of 1,000 meters or more above the sea level Rs.300/- pm

(iii) Specified Areas Rs.800/- pm

9 10(14)(ii)

Border area allowances

Amount exempt from tax varies from Rs. 200/- pm to Rs. 1300/- pm

10 10(14)(ii)

Tribal area allowance

[Given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa]

Amount exempt from tax is Rs. 200/- pm

Don’t forget to take below-mentioned allowances also!

Sl no Section Allowances
1 10(14)

Travelling allowance/Transfer allowance

Expenses on travel, tour or transfer shall be exempted.

The exemption will be limited to the lower of
a. Actual Expenditure
b. Amount of allowance provided by the employer

2 10(14)

Daily Allowance

To meet the ordinary daily expenditure incurred by the employee on account of his absence from the normal place of duty, due to tour or journey in connection with his transfer.
The exemption will be limited to the lower of
a. Actual Expenditure
b. Amount of allowance provided by the employer

3 10(14)

Helper/Assistant Allowance

To meet the expenditure on a helper engaged for performing the official duty.
The exemption will be limited to the lower of
a. Actual Expenditure
b. Amount of allowance provided by the employer

4 10(14)

Research Allowance

to meet the expenditure on academic research and other professional pursuits
The exemption will be limited to the lower of
a. Actual Expenditure
b. Amount of allowance provided by the employer

 

Example:

Name of allowance Amount of allowance (A) Actual expense
 (B)
Exempted

(C)
[Lower of A and B] 

Taxable
[A-C]
Travelling allowance 10000 12000 10000 0
Conveyance allowance 18000 20000 18000 0
Daily allowance 6000 6600 6000 0
Helper allowance 3000 3400 3000 0
Research allowance 8000 11000 8000 0
Uniform allowance 3000 4500 3000 0
Taxable allowance 0
 

An employee is required to show evidence of above expenditures. So the question of an excess of allowance over expenditure does not arise.

Source: Rule 2BB of section 10(14)

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