Non Taxable Allowance

What is Non Taxable Allowance?

An Allowance is a financial advantage given to employees other than a regular salary. Allowances are considered to be a part of the salary structure in payroll processing. These allowances are paid to employees by an employer to satisfy an employee’s specific type of expenses for example HRA, LTA, medical, etc.

Allowances are divided into three categories;

• Taxable,
• Non-taxable,
• Partially Taxable.

Non-taxable allowances are an element of an individual’s salary which is fully exempted from taxes.

The List Of Allowances Considered As Non –Taxable:

• Allowance paid to UNO employees: Allowances received by employees of UNO are fully exempt from taxes. They are completely non taxable.
• Allowances paid to judges of HC & SC( Sumptuary allowance): Allowances paid to the judges of the high court and supreme court are completely non taxable.
• Allowances paid to government employees abroad: When servants of the Indian govt. are providing their services abroad, such income is fully exempt from taxes.
• Compensatory Allowance: When a judge of the high court and Supreme Court receive any compensatory allowances, they are exempted from allowances in tax.

Also,See: Provident fund (PF) | Professional Tax (PT)