Dearness Allowance (DA) is an allowance paid to employees as a cost of living adjustment allowance paid to the employees to cope with inflation. DA paid to employees is fully taxable with salary. 

Employees are allowed the lowest of the declared amount one-fifth of basic salary, actual amount received as allowance or Rs. 5,000. This is an allowance provided to employees to reimburse the expenses incurred on the hospitality of customers. However, Government employees can claim exemption in the manner provided in section 16 (ii). All other employees have to pay tax on it.

Employers may provide an overtime allowance to employees working over and above the regular work hours. This is called overtime and any allowance received for this is fully taxable.

House rental allowance (HRA) is allowance paid for house rent .

HRA as per actuals received by the employee

• Rent paid as per actuals less 10% of Basic Salary
• In Metros i.e Delhi, Mumbai, Chennai or Kolkata, as much as 50% of basic salary or else 40% of it if the accommodation is in a non-metro.any amount of House Rent Allowance received after claiming such deduction is taxable.

Conveyance allowance, also called Transport Allowance.  That’s paid by the company towards cost of travel from home to work and back and is exempt from Income tax. Allowances are generally offered to employees on top of their basic salary component and may or may not be taxable as per the Income Tax Act.

Employees are given a certain amount to educate their children in India. Any sum spent more than the provided limit of Rs. 100 per month per child for maximum two children, is taxable.

This is an allowance paid by the employer when the employee or any of his family members fall sick for the cost incurred on their treatment. If any such reimbursement exceeds Rs.15,000 per year; the same is taxable.