An employer can grant you different types of allowances which enable you to get an adequate amount of financial benefits. These allowances can be availed monthly and are classified into several categories. If you want to save while filing an income tax return, which contains the details of your overall tax liability, then you can utilise the benefits of these financial allowances.
ITR Filing Financial Allowances and Their Types
In terms of taxation, there are three major types of allowances: taxable, partially taxable, and non-taxable. Salaried people receive a most common and well-known allowance from their employers which is granted under section 10. All these types of allowances are mentioned in Form 16, a document which contains all the details of Tax Deducted at Source or TDS, your detailed income specs, and exempted allowances under Section 10.
List of Allowances To Get:
HRA or House Rent Allowance
Salaried individuals living as a tenant are eligible to get an HRA from their employers included in their salaries. “If you live in a metro area, you will receive a total of 50% of your pay (basic salary + Dearness Allowance), or 40% if you live in a non-metro area. Second, excess rent payments that exceed 10% of annual income (base salary plus DA)”, mentioned News18.
Under tax provisions an employer’s travel expenses for, we can say vacations, are tax free in India. In this allowance case employees can get take off from work and get travel expenses to have some vacations. Remember, LTA can only be claimed when you travel via train, bus or any public transport.
Child’s Education Allowance
A maximum of two children are free from payment up to Rs. 100 a month per child. This is very low but still counts as a financial benefit.
“The cost of maintaining or acquiring a uniform to be worn while performing office or employment-related responsibilities are exempt from the actual amount spent.”
“In accordance with income tax law, expenses incurred for books, newspapers, periodicals, journals, etc. are reimbursed tax-free. The amount reimbursed is the lesser of the bill amount or the sum included in the compensation package.”