Monetary Allowance

Tax Glossary Definition

Monetary Allowance

Refers to a cash-based component of an employee’s compensation package, typically paid to cover specific expenses or as additional remuneration. Such allowances are taxable in full unless a specific exemption is provided under the Income Tax Act. Example: A daily travel allowance of ₹500 paid to an employee is treated as taxable income unless covered by an applicable exemption.

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