Understanding Allowances: When Can CCA, Special, and Medical Allowances Be Given Without Tax Issues?

Dear sirs,

1) Please advise under what circumstances CCA, Special Allowance, and Medical Allowance can be given.

2) What is the maximum limit to avoid Income Tax (IT) and Fringe Benefit Tax (FBT)?

Regards,
Ramesh kg

Hi,

CCA and Special Allowances are taxable to the employee. However, if you provide the medical component as Medical reimbursement, where employees submit bills, the same is tax-free up to Rs. 15,000 per annum.

Regarding your query about the circumstances under which you can include these under the salary heading: Both CCA and Special allowances are taxable in the hands of the employee; it is the organization's decision if they want to reduce the tax burden for the employees or if they have more tax-friendly salary packages designed.

I hope this addresses your query. One more thing you could have done was to search on this site itself; your query would have been answered a long time ago. There is a lot of material on CTC available on this site.

Warm Regards,
Anuradha Zingade