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Clubbing of allowances

This query is : Resolved 
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(Querist)
06 June 2025 Hi Respected Friends,

Could you guide if clubbing of allowances for reimbursement to employees is allowed ? We are capping allowances for Fuel and Internet together to maximum Rs. 2000 per month but want to give option to employees that they decide which allowance to opt for. One of the issue is payroll system does not have feature to cap overall allowances to above limit and hence one of the suggestion was to create "General Allowance" and define it as combination of fuel and internet allowance with capping of 2k per month.
Is this allowed ?
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CA Ayush Agarwal

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CA Ayush Agarwal (Expert)
06 June 2025 if you can justify either of these allowance, are dedicated and used only for official purpose, then Yes these are exempt, the justification should be on the basis of supporting documents.
you may mention as "Fuel and Internet allowance".
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