Special allowance is a fixed amount that is given to employees over and above the basic salary in order to meet certain requirements. There is a taxable allowance and an exempt allowance. There are different categories of special allowances.
What does special allowance mean?
Allowance is a fixed quantity of money given by employers to their employees to meet certain special requirements. This amount is given besides the salary. These allowances may attract exemption in certain cases. Otherwise, they are considered as a part of the total income of employees and are taxable.
Do we get special allowance in salary?
The special allowance is included in the total salary. These allowances are based solely on an employees basic pay. Therefore, any such payment made in addition to an employees salary may have both tax-exempt and taxable components, with exemptions based on the grounds for the allowance.
Can special allowance be more than basic salary?
The cold comfort is that the special allowance is usually not bigger than the basic salary. Special allowance is often treated as a remainder. Part of the CTC that cannot be allocated to any other salary head generally goes to the special allowance. This is linked to the basic salary.
What is the limit of special allowance?
Special Allowance and its CategoriesGrounds for allowanceExemptionsHostel allowanceMaximum limit is Rs. 300 per child for 2 children in a family. Any excess amount is taxable.TransportRs. 1600 a month/ Rs. 3200 a month for handicapped employees. The rest or excess is taxable.9 more rows
What is medical allowance salary?
Medical Allowance is a fixed amount of money paid to the employees by an employer as part of their total salary to meet their medical needs. This allowance is provided to the employee every month whether the employee submits the medical bills to substantiate the expenditure or not.
What is a benefit allowance?
What is a Benefit Allowance? A benefit allowance is money that a company or government agency provides to an employee for a specific purpose, such as transportation, healthcare costs, or a flexible spending account. Benefit allowances administered to employees can be distributed through regular payroll.
What is daily salary allowance?
Under the same Rule 2BB another allowance which is completely exempted from tax is the daily allowance, whether granted on tour or for the period of journey in connection with travel, to meet the ordinary daily charges incurred, by the employee on account of his absence from the normal place of duty.
What is salary allowance?
What is Allowance? An allowance is a fixed amount of money received by a salaried employee from his employer to meet a particular type of expenditure over and above salary. For example, companies provide overtime allowance to employees if they work more than fixed working hours.
How do I calculate my salary allowance?
Now, lets calculate the same in the following three scenarios:Amount received as HRA from employer = Rs. 13,000 X 12 (months) = Rs. 1,56,000.Or, Actual rent paid less 10% of basic = (Rs. 10,000 X 12) – Rs. 36,000 = Rs. 84,000.50% of basic salary since he lives in a metro = Rs. 1,80,000.
What is the limit of medical allowance?
Rs.15,000 per year The maximum amount that can be claimed as deduction for medical allowance is Rs. 15,000 per year. Therefore, in case you have incurred medical costs of, say, Rs. 38,000 over the course of a financial year, you will have to produce your medical bills and you will get a tax benefit of Rs.
What is monthly benefit allowance?
A benefit allowance is money that a company or government agency provides to an employee for a specific purpose, such as transportation, healthcare costs, or a flexible spending account. Benefit allowances administered to employees can be distributed through regular payroll.
Is allowance considered salary?
Salary refers to remuneration, including allowances, paid for work done under a contract of service. It does not include: Pension or provident fund contribution paid by the employer.
What is the difference between basic salary and allowance?
Basic salary is the base income of an individual. Basic salary is the amount paid to employees before any reductions or increases due to overtime or bonus, allowances (internet usage for those who work from home or communication allowance).
Is it good to have basic salary high?
Generally, a higher basic pay enhances the tax exemption limit for HRA. It also increases contribution towards retirement benefits like provident fund (usually 12 per cent of the basic pay) and superannuation fund, which means a lower take-home salary, says Parizad Sirwalla, partner, Tax, KPMG.
Is medical allowance part of salary?
Medical allowance is a fixed component that you receive every month as part of your monthly salary, that is taxable as salary income. Whereas Medical reimbursement is a tax-free component and as discussed above, it is exempted up to the amount spent by employee or Rs. 15,000 whichever is less.