What are Allowances and Its Types?

Modified on Tue, 13 Dec 2022 at 02:12 PM

What are Allowances?

Types of Allowances?

What are Allowances?

It is a fixed amount of money paid to the employees at regular intervals for a specific purpose in addition to the basic salary. For instance, if employees travel from one place to another to perform their duties, they will be paid additional to their basic salary.

However, employers provide different types of allowances depending on employees’ duties.

Types of Allowances

Dearness Allowance

Dearness Allowance is an allowance provided to reduce the impact of inflation. The allowance is fully taxable along with salary as per the Income Tax Act.

You can add dearness allowance to your employee's salary calculation via the SalaryBox app.

Meal Allowance

A meal allowance is also known as a food allowance and is provided by the employer to employees to purchase food. It can be provided as prepaid food cards or digital coupons.

If you want to add a meal allowance to your employee's salary, refer to these steps.

Medical Allowance

The employer provides a fixed allowance and a basic salary to enable the employees to meet their medical needs. The allowance is provided every month and is fully taxable.

Now you can add a medical allowance to your employee's salary; refer to the given steps.

HRA (House Rent Allowance)

HRA is an allowance provided by the employer for accommodation purposes. However, it is only applicable if an employee lives in a rented house.

You can add HRA to your employees' salaries via SalaryBox. Here are the steps to do it.

Special Allowances

Special Allowance is an allowance provided to employees to meet certain requirements in their duties. In addition, the remaining amount given, apart from other allowances such as HRA, medical, meals, etc., is referred to as Special Allowance.

To add special allowances to the SalaryBox app, check out our guide here.

Travel Allowance

It is an allowance provided to employees that covers all the costs related to travel on duty. You can refer to this article to know how to add it to your employee's salary.

Custom Allowance

Allowances may depend on companies and industries. Therefore, custom allowance allows you to add those allowances to your employees’ payroll calculation.

To add Custom Allowance to the application, check this article.

Specific Allowance

If you provide allowances to your employees on specific days or months of the year, you can add it as a specific allowance in the SalaryBox application.

To know how to add a specific allowance, refer to this article.

If you need assistance regarding our application, reach out to our support team at support@salarybox.in

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