1.    Foreign Allowance (Section 10(7): Any allowance or perquisite paid or allowed as such outside India by the government to a citizen of India for rendering service outside India shall be exempt from tax.

2.    Children Education Allowance (Section 10(14)(ii) read with Rule 2BB): Rs.100 per month per child is exempt up to a maximum of two children.

3.    Children Hostel Allowance (Section 10(14)(ii) read with Rule 2BB): Rs.300 per month per child is exempt up to a maximum of two children.

The following allowances are also exempt as per Section 10(14)(ii) read with Rule 2BB:

4.    Any allowance granted to an employee working in any transport system to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place, provided that such employee is not in receipt of daily allowance. This allowance is exempt to the tune of 70% of such allowance or Rs.10,000 per month whichever is lower.

5.    Any special allowance in the nature of counter-insurgency allowance granted to the members of armed forces operating in areas away from their permanent locations is exempt up to Rs.3,900 per month.

6.    Underground allowance granted to an employee who is working in uncongenial, unnatural climate in underground mines, is exempt up to Rs.800 per month.

7.    Any special allowance in the nature of high altitude (uncongenial climate) allowance granted to the member of the armed forces operating in high altitude areas, is exempt to the tune of Rs.1,060 per month for altitude from 9000 to 15000 feet and Rs.1600 per month for altitude above 15000 feet.

8.    Any special allowance granted to the members of the armed forces in the nature of special compensatory highly active field area allowance is exempt to the tune of Rs.4200 per month.

There are many more allowances specified in Rule 2BB for the purpose of Section 10(14)(ii) but they are not applicable to whole of India and hence, are not discussed here. Interested persons may please refer to Rule 2BB.

Please note that transport allowance for which exemption of up to Rs.1600 per month is now withdrawn.

The following allowances are prescribed for the purpose of Section 10(14)(i) read with Rule 2BB:

9.    Any allowance granted to meet the cost of travel on tour or on transfer. This includes any sum paid in connection with transfer, packing and transportation of personal effects on such transfer.

10. Any allowance, whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

11. Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit. Free conveyance should not have been provided by the employer.

12. Any allowance granted to meet the expenditure incurred on a helper where such helper is engaged for the performance of the duties of an office or employment of profit.

13. Any allowance granted for encouraging the academic research and training pursuits in educational and research institutions.

14. Any allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform for wear during the performance of duties of an office or employment of profit.