What are the tax exemption limits for reimbursements allowances, paid to employees

What are the tax exemption limits for reimbursements allowances, paid to employees Check Now :

House Rent Allowance (HRA):

If you are receiving HRA as part of your salary and also pay rent for residential accommodation then you can claim the HRA paid to you as exempt from tax subject to certain limits and restrictions. These are as follows:

Minimum of the following HRA is exempt from tax:
(i) Actual HRA received
(ii) 50% of annual salary* if living in metro cities or else 40%
(iii) Excess of annual rent paid over 10% of annual salary

Dearness Allowance (DA) :

Normally, Dearness Allowance or DA is only paid by the Government to its employees. However, it is fully taxable for every salaried taxpayer irrespective of whether he/she is a government or non-government employee.

Leave Travel Allowance (LTA): Employees who receive LTA from their employers can claim exemption. However, this exemption is subject to the following rules:

(i) The exemption is available on 2 journeys in one block of 4 years.
(ii) The amount of exemption available is lower of the actual amount spent to reach the destination via shortest route or the amount received from the employer.
(iii) To claim exemption, the cost of reaching the destination can be taken as A/C .

City Compensatory Allowance:

This is one of the common components of the salary structure. It is similar to DA as it is offered to employees to compensate for the high cost of living in cities. Just like DA, it is also fully taxable in an employee’s hands.

Special Allowance:

Any Allowance received by an employee which does not fall under any other allowances head, is fully taxable in his/her hands.

Overtime Allowance:

Some employers compensate for the overtime done by their employees. This allowance is taxable in the employee’s hands.

Children Education Allowance:

If you are receiving children education allowance from your employer then you are eligible to claim a tax exemption under the Income-tax Act. However, the maximum amount exempted is Rs. 100 per month or Rs. 1200 per annum for a maximum of up to 2 children. Along with this, you can also claim deductions for fees paid for your children under section 80C.

Hostel Expenditure Allowance:

Similarly, any hostel expenditure allowance received by you for your children from an employer is eligible for exemption up to Rs. 300 per month or Rs. 3600 per annum for maximum up to 2 children.