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5 taxable allowances for employees

​1. Dearness Allowance (DA)
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​1. Dearness Allowance (DA)

This is provided for the adjustments of inflationary effect on the cost of living to public sector employees.

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​2. City Compensation Allowance (CCA)
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​2. City Compensation Allowance (CCA)

It is offered to the employees to meet the living expenses in areas like the metros and big cities.

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​3. Entertainment Allowance
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​3. Entertainment Allowance

Offered to the employees for the expenses incurred on the hospitality of customers, this is taxable for nongovernment employees.

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4. Miscellaneous Allowances
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4. Miscellaneous Allowances

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

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​5. Project Allowance
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​5. Project Allowance

This one is 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.)

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