Special allowances are taxable by itself.... However if you are distincting it like say entertainment allowance, mobile allowance, etc, you may save on it...
Mobile Allowance - Fix a monthly limit on it. What happens here is that the company agrees to pay / reimburse your mobile bills to a max amount of X per month.... However note that the tax liability will be either on the bill amount or the max amount quoted on your salary slip as mobile allowance, which ever is lower...
So say for example, your company is giving you 1000/- mobile allowance per month and your mobile bill is 1500/- then the whole 1000/- will be tax exempted as the whole amount was reimbursed. The additional 500 will be your out-of-pocket expense.
On the other hand, if your mobile allowance is 1000/- and your bill is say 800/- per month, then you'd get tax exemption only on 800 (actuall bill amount) and the balance 200/- will be your taxable income...
Similarly if we distinguish the special allowance as entertainment allowance, a funda similar to mobile allowance is applicable.
However the catch here is the entertainment allowance should be utilized only for business purpose.... So if you are taking your client on business outing, business lunch/dinner etc, those would be included here and reimbursed....
This way you can partially save your tax.....
Hope this helped you and answered your query.