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Allowances exceeds basic pay

kevin (articleship) (111 Points)

14 August 2013

is that normal if person getting allowances more than value of his basic pay..for example if person's basic pay is rs. 40000/-p.a and getting allowances of rs. 65000/- p.a..

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Mihir (Wealth Manager) (5293 Points)
Replied 14 August 2013

Yes, it can happen. Basic salary is of course taxable. But allowances can be fully taxable, partly taxable and fully exempt. So sometimes the employer gives more partly taxable or fully exempt allowance to benefit the employees.