Allowances under section 17(3) of Income tax Act 1961
Allowances are given to an employee to meet some specific type of loss or expenditure of the employee or to help him meet certain type of expenses. For example, house rent allowance is given to help the employee to pay house rent or to get a house on rent. We can categories the allowance in three groups on the basis of their tax treatment: 1. Fully Exempted: a. Foreign Allowance only in case of government employees posted outside India. b. House rent allowance given to judges of High court and Supreme court. c. Sumptuary allowance given to judges of High court and Supreme court. d. Allowances from UNO e. Allowance to teachers or professor from SAARC member states. f. Allowance to member of union public service commission. 2. Fully taxable: a. Dearness Allowance additional dearness allowance, high cost of living allowance. b. City compensatory allowance. c. Capital compensatory allowance. d. Lunch allowance. e. Tiffin allowance. f. Marriage allowance. g. Family allowance. h. Deputatio
