Income Tax Return (ITR) filing: From dearness allowance to cash for marriage, holidays - 11 financial benefits that are taxable
An employee has to declare taxable allowances in ITR forms either through offline or online to file for returns. Simply put, ITR helps in reducing the cost of taxes you pay on allowances.
If you are a salaried employee, then you must be aware of various allowances that are offered as a part of your salary. These allowaces are given as financial benefits. Every citizen earning money through some source of income has to pay income tax on it. However, they can also save big at the time of income tax return (ITR) filing. An employee has to declare taxable allowances in ITR forms either through offline or online to file for returns. Simply put, ITR helps in reducing the cost of taxes you pay on allowances. For this, it is important to understand what financial benefits from the salary are liable for taxes.
Here's a list of 11 allowances which are taxable in your salary:
1. Dearness Allowance - No matter whether you are a government employee or a non-government employee, every dearness allowance you earn is taxable. The DA paid to employees are fully taxable with salary. Also the Income Tax Act, also recommends that tax liability for DA along with salary must be declared in the filed return.
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2. Project Allowance - If you have a project or a task in hand, and your employer provides you an allowances in this regard, it is fully taxable.
3. Overtime Allowance - There are many organisations who offers extra allowances to employees for their work above regular hours. Hate to break it for you! But, these are fully taxable and fall under the bracket of income from other sources.
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4. Interim Allowance - If your employer gives you any Interim Allowance in lieu of final allowance, then they are entirely taxable.
5. Tiffin/Meals Allowance - Many big companies have a facility to provide tiffin, meal services to their employees. They provide allowance in this regards as well, which are also fully taxable.
6. Non-Practicing Allowance - These are meant for physicians who are attached to Clinical Centers of the various Laboratories/Institutes. Any non-practicing allowance paid to them is entirely taxable.
7. Servant Allowance - If your employer provides you allowances for appointing servants for you, then these are also fully taxable.
8. City Compensatory Allowance - This one is paid to employees residing in an urban centre which are highly expensive. To cope with the inflated living costs in the cities, employer gives city compensatory allowances. These are also taxable!
9. Warden Allowance - Such benefits are given to employees who work as warden. For instance Keeper in an educational Institute and many more. However, the allowance received is taxable.
10. Entertainment Allowance - A marginal portion of an employee's salary goes towards entertainment allowance in majority of companies. Generally, one fifth of the salary involves entertainment allowance or Rs 5000, whichever is less. An employee can avail this benefit via reimbursement procedure at their organisation.
11. Cash Allowance - Such allowances are given against situations like marriage, bereavement or holidays. Hence, they are fully taxable.
Thereby, if you are receiving the above mentioned allowances from your employer, then make sure you are aware to fill a form for your ITR filing.
er, then make sure you are aware to fill a form for your ITR filing.