ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are three different types of allowances. These three types of allowances include: non-taxable, partially taxable, and taxable.

Detailed explanation-2: -An allowance is an amount of otherwise taxable income that you can earn each year, without paying tax on it.

Detailed explanation-3: -Other income includes earnings other than wages or income from self-employment, retirement income, investments, foreign income, and canceled debts. Other income must be reported to the Internal Revenue Service (IRS) on Schedule 1 and Form 1040, and it’s taxable.

Detailed explanation-4: -An allowance is a financial benefit given to the employee by the employer over and above the regular salary. These benefits are provided to cover expenses that may be incurred to facilitate the discharge of service for example Conveyance Allowance is paid to foot expenses incurred for commuting to the workplace.