Re: Allowance in IT industry
House Rent Allowance
HRA, which is part of the basic salary, is fully or partially exempt from taxes. Salaried individuals who live in a rented house can claim HRA to lower their taxes. If you are not living in a rented house then your HRA is fully taxable.
Dearness Allowance:
Dearness Allowance (DA) is an allowance paid to employees as a cost of living adjustment allowance. The allowance is paid to the employees to manage the inflation. DA is fully taxable with salary. The income tax act clearly specifies that tax liability for DA will be calculated along with salary. It should be declared while filing your income tax returns.
Conveyance Allowance
You do not have to provide any document of conveyance allowance from your employer. The total amount of Rs1600 per month or Rs 19200 per annum can be claimed as tax exemption under this allowance. It is given to employees to meet their daily routine expenses travelling from your home to work. The limit was doubled in the budget 2015. Earlier it was Rs 800 per month.
Special Allowance
After doing all the allocation of your salary into various components, you may see a component as ‘special allowance’ which is fully taxable. This allowance can include any amount as it is taxable. This allowance is used by the company to formulate the salary of an employee.
Bonus
There are various kinds of bonuses like annual bonus, semi-annual bonus, performance bonus, festive bonus, etc. It is usually paid on the occurrence of an event, semi-annually or annually. Bonus, paid to the employee by any name, is fully taxable.
Leave Travel Allowance
The exemption is provided for short distance trips mainly within the country itself. This allowance can be claimed for going on a trip with a spouse, children and parents, but not relatives or friends, etc. you need to submit the bills, tickets, all the actual expenses occurring during the journey to your employer to claim for this particular exemption.
Overtime Allowance
Nowadays most of the companies are running 24×7 where employees, sometimes or as per the employer’s requirement, have to do overtime and for doing so they are being paid extra amount. This extra amount is showed as overtime allowance in the pay slip of employees working over and above the regular work hours. The allowance received through overtime allowance is fully taxable under the IT Act.
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