Non Taxable Allowance

An Allowance is a financial advantage given to employees on top of the regular salary. These allowances are paid by an employer to meet an employee’s specific type of expenses for example conveyance, medical, HRA, LTA, etc. Allowances are considered to be part of the salary structure in Indian Payroll. Based on the tax behaviors, allowances are divided into three categories; Taxable, Non-taxable, and Partially Taxable allowances.

Non-taxable allowances are those allowances that are a part of an individual’s salary which are fully exempted from taxes.

Here is the list of allowances that are fully non -taxable.

  • Allowances Paid to Government Employees Abroad: When Indian Government Servants are providing their services abroad, their income is fully exempt from taxes.
  • Allowances Paid to UNO Employees: Allowances that are paid to UNO (United Nations Organization) Employees are completely non-taxable.
  • Allowances Paid to Judges of HC & SC: Allowances paid to the judges of the High Court and Supreme Court are completely non-taxable. These allowances are also called sumptuary allowances.
  • Compensatory Allowances: When Judges of the High Court and Supreme Court receive any compensatory allowances, these are exempted allowances in income tax.