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Uniform allowance exemption or dress allowance exemption is the tax exemption available to employees on the amount incurred on the purchase and maintenance of office uniforms or dresses. Office uniform is the uniform that an employee has to wear during the performance of his/her duty. Uniform allowance exemption is the exemption provided on this special allowance, which includes washing allowance exemption under section 10. There are various rules with regard to the taxability of this allowance. This blog covers the rules and limitations of uniform allowance exemption and its taxability.
Allowances are the financial benefits given to the employees by their employer over and above their salary. While some allowances are taxable under the salaries head, other allowances are non-taxable or partly taxable.
As per the provisions of section 10(14)(ii) of the Income Tax Act, the total expenditure incurred by the employee for maintaining his/her uniform is exempt from tax. Uniform allowance is the allowance provided by the employer to the employee for maintaining their uniform while carrying out their official duties. The expenditure incurred on maintaining such uniform is exempt from tax during their employment tenure.
According to the Income Tax Act of 1961, uniform allowance falls under the special allowance category. Thus, it is exempt from tax.
As per the latest reports of CBDT (Central Board of Direct Taxes), only certain special allowances can be deducted from income under the new tax regime. These allowances include -
Unlike the old tax regime, there are a few allowances that are not allowed as exemptions under the new regime. These allowances are as follows -
Note: The individuals who are willing to claim the exemption of uniform allowance from their income have to file their ITR under the old regime, as the new regime does not allow for the exemption of uniform allowance.
The calculation of uniform allowance varies according to the nature of employment. Given below is the calculation of uniform allowance for government and private sector employees -
Uniform Allowance for Government Employees
As per the recommendations of the 7th Pay Commission, the Government of India has introduced certain changes to the allowances of nursing personnel who work in Central Government departments.
Uniform Allowance for Private Employees
For private employees, the expenses incurred on purchasing or maintaining the uniform used during office hours are fully exempt for employees upto the amount of actual expenditure incurred on purchasing and maintaining the uniform under section 10(14)(ii) of the Income Tax Act. Any amount received over and above this amount is taxable under the Income Tax Act. There is no maximum limit as to how much amount is exempt from tax under this section.
It is necessary to show the uniform allowance received during the financial year in ITR under “Allowances to the extent exempt u/s 10,” which is there under the “Part-B Gross Total Income: Section” of the ITR form.
If you are someone receiving a uniform allowance, then you can claim an exemption of the same upto the amount of expense incurred on the purchase and maintenance of office uniforms. But, to claim this exemption, it is important to report it in ITR. Claiming exemption and reporting in ITR can be complicated, especially for laymen. So, it is advisable to get help from experts who can guide you through the entire process and ensure that you never miss claiming uniform allowance exemption. Tax2win’s tax experts are highly experienced and always committed to helping you with your tax worries.
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There is no limit to the maximum uniform allowance exempt under the Income Tax Act. The reimbursement received against the actual expense incurred on buying and maintaining the uniform to be worn within the office hours is exempt from tax. Any amount exceeding the actual expenditure is taxable.
Uniform allowance is the special allowance given by the employer to the employee for purchasing and maintaining the uniform that he/she is supposed to wear during office hours.
