Outlook Money
When an employer pays a travel allowance to its employees performing office duties, it is considered a special allowance for tax purposes.
If an office requires its employees to dress in uniform while on duty and pays an allowance for this purpose, it would be exempted from tax.
Many organisations pay their employees for research and academic purposes. This allowance is also tax-exempted.
Sometimes, the work area is difficult, such as hilly terrain, border areas, etc. In this case, an allowance paid by the employer as a special allowance is tax-exempt.
The exempted amount in special allowance can be up to the amount spent. Let’s say the allowance is Rs 10,000, but the actual expenditure was only Rs 8,000; the remaining Rs 2,000 will be taxable.