Cash Allowance: The employer provides cash allowance like marriage allowance, holiday allowance, etc.Tiffin Allowance: It is provided for the food expenses of the employee.Overtime Allowance: The amount provided when an employee does extra working hours than his regular working hours.Government employees can claim the exemption u/s 16(ii) for it but not non-government employees. Entertainment Allowance: It is given to the employees for expenses like the meal, beverages, hotels, etc.The employer need not provide CCA as it is taxable if the amount is above Rs.900.
City Compensation Allowance(CCA): It is for the employee to meet his/her high costs of living in a metropolitan / Tier-1 city like Delhi, Mumbai or Bangalore.CCA is also applicable for Tier-2 city employees and it changes from one city to another.Dearness allowance is usually revised twice in a year, first in January and then in July. Dearness Allowance (DA): DA is provided to compensate for the inflation impact on the employee during his/her employment period.The different types of allowances in the salary slip for the benefit of an employee are: For example, if employees work more than their fixed working hours, they get overtime allowance.Īllowances are a part of the salary and it is taxable, except for some exemptions provided under various sections of the Income Tax Act. According to the law, the basic pay will be 30% to 60% of the salary. The allowance amount is calculated on the basic salary of the employee. Difference between Allowance and ReimbursementĪn allowance is a fixed amount received by a salaried employee from his employer to meet specified needs or expense other than his/her basic salary.Difference between Basic salary and Allowance.Hello, in this post we are going to discuss the different types of allowances in the salary slip of an employee.