According to section 14(i), allowances that are paid to the employee for the performance of duty are called as special allowances. Examples of such allowance are the children’s education allowance or the children hostel allowance wherein the amount is paid by the employer for the education or for the hostel expenses of the employee’s children. In case of children education allowance, the exemption is available to the extent of Rupees 100 per month per child for maximum of 2 children and Rs 300 per month per child for a maximum of 2 children in case of the children hostel allowance. If the amount exceeds the limit in both the allowances then it is taxable.

Where it can be added in SalaryBox app?

  • Select the employee on which you want to add allowance to

  • Go to Salary Payment Info

  • Click on edit ESI, EPF and Allowance option 
  • Select Special Allowance and add