Home Other Fully Taxable Allowances
The following allowances are fully taxable under the Income Tax Act, regardless of their purpose or amount received. These components are added to the total income while computing taxable salary:
Dearness Allowance (DA) is paid to employees to offset inflation and rising living costs. It is fully taxable and forms part of the salary for taxation and retirement benefits.
Commission is an additional earning given to employees based on performance or business generated. It is fully taxable and included in gross salary, regardless of fixed or percentage-based calculation.
Bonus is a reward paid in addition to salary, often based on company profits or individual performance. It is treated as a taxable income component and is taxed as per slab.
City Compensatory Allowance (CCA) is paid to employees working in metro cities to cope with higher living expenses. This allowance is fully taxable and added to the total salary income.
Rural Allowance is granted to employees posted in remote rural areas. Despite the hardships faced, this allowance is fully taxable and does not qualify for any special tax exemption.
Proctorship Allowance is provided to academic staff responsible for student supervision. This allowance is considered part of income and is fully taxable under the head “Income from Salaries.”
Wardenship Allowance is paid to hostel wardens for their responsibilities. It is treated as salary income and is fully taxable, without any separate exemption or concession under income tax law.
Project Allowance is paid to employees assigned to special projects or tasks. Despite its purpose, this allowance is fully taxable and must be disclosed in salary income while filing taxes.
Deputation Allowance is provided when an employee is transferred temporarily to another organization. It compensates for transfer discomfort but is fully taxable under income from salaries.
Overtime Allowance is granted for working beyond regular hours. Regardless of necessity, this allowance is fully taxable and must be included in total salary while computing tax liabilities.
Interim Relief is a temporary increase in pay until a formal revision is announced. Though transitional, it is fully taxable and forms part of the gross salary for taxation.
Tiffin Allowance, meant for meal expenses during duty hours, is not exempt from tax. It is treated as part of salary and is fully taxable under current income tax laws.
Fixed Medical Allowance is paid irrespective of actual medical bills. Since it's a lump-sum benefit and not based on reimbursement, it is fully taxable as part of salary income.
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