There are 10 special allowances which are offered under section 10(14) of the Income Tax Act. Here’s how they can help you avail tax exemptions:
1. Children Education Allowances: Under section 10(14) up to Rs. 100 per month per child up to a maximum of 2 children is exempted.
2. Hostel Expenditure Allowances: Similar to children education allowances, if you are paying for hostel fees then you can claim Rs 300 per month per child tax exemption, which can go maximum up to 2 children. In a year, on one child maximum Rs 3,600 can be tax exempt.
3. Transport Allowances – This one is granted to an employee to meet expenditure for the purpose of commuting between place of residence and place of duty. Rs 3,200 per month granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities
4. Transport allowances in transport business – This one is meant for employees working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. Here, 70% of such allowances or Rs 10,000 per month are tax exempt.
5. Conveyance Allowances – It is granted to meet the expenditure on conveyance in performance of duties of an office. Tax exemption here is up to the extent of expenditure incurred.
6. Tour or transfer allowances – Just like conveyance, tax exemption is given to the extent of expenditure incurred. Tax exemptions are given on costs regards to travel while you are on tour. Also, tax benefits are available to an employee who is getting transferred from one location to another.
7. Daily allowances – Here, tax is exempted to the extent of expenditure incurred. This allowance is given to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
8. Helper/Assistant Allowance – There can be a situation sometimes, when your employer has asked you to appoint a helper for carrying out official duties of the office. In any of these cases, that helper is allowed a tax exemption to the extent of expenditure incurred.
9. Research Allowances – Tax exemption here is granted to those are looking for further studies while working. This is given as an encouragement for achieving academic research and other professional pursuits.
10. Uniform Allowances – As the name suggests, this one is given for maintaining or purchase of uniform which is required during duty. Exemptions here is only given, if your office has levied the norm of wearing a specific uniform.