5 allowances that are taxable for employees

1. Dearness Allowance (DA) is provided for the adjustments of infl ationary effect on the cost of living to public sector employees.

2. City Compensation Allowance (CCA) is offered to the employees to meet the living expenses in areas like the metros and big cities.

3. Entertainment Allowance is offered to the employees for the expenses incurred on the hospitality of customers is taxable for nongovernment employees.


4. Any cash allowance given to employees for holidays, marriage or bereavement etc. is fully taxable.

5. Project Allowance for project related expenses, meals allowance for food expenses and overtime allowance for working extra hours are also taxable.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)