Accountancy Forum

I want to know the allowances which are exempted and can help to reduce tax of an employee.

Medical Allowance is exempted upto 10% of basic salary.

Is there any other allowance which is exempted?? I have heard that there is allowance like"Kit or any allowance related to performance of employee " is exempted. if yes then how much?

following are the exact wordings
http//www.fbr.gov.pk/tpef/brochures/2009/Salary.pdf

Allowances like cost of living, subsistence, rent, utilities, education, entertainment or travel, but does not include any allowance solely expended in the performance of the employee’s duties of employment, e.g. washing allowance and kit allowance for employees required to wear a specified uniform in the performance of their duties of employment

Thanks in advance

Imran Ahmed

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Ikhan</i>
<br />I want to know the allowances which are exempted and can help to reduce tax of an employee.

Medical Allowance is exempted upto 10% of basic salary.

Is there any other allowance which is exempted?? I have heard that there is allowance like"Kit or any allowance related to performance of employee " is exempted. if yes then how much?

following are the exact wordings
http//www.fbr.gov.pk/tpef/brochures/2009/Salary.pdf

Allowances like cost of living, subsistence, rent, utilities, education, entertainment or travel, but does not include any allowance solely expended in the performance of the employee’s duties of employment, e.g. washing allowance and kit allowance for employees required to wear a specified uniform in the performance of their duties of employment

Thanks in advance

Imran Ahmed
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can anyone confirm this?

thanks,
Imran Ahmed

Dear,
All those expenditures, which incurr for the purpose of accomplishment of employee's duty are exempted from tax. In this regards, Kit/ Washing allowance is exempted , since these are provided for the purpose of employee's duty. However, no other allowance (like cost of living, rent, utilities, entertainment , education etc) will be exempted from tax.

I have sent you an email, which might be helpful for you, ( This is the same email, which is being sent under the topic "For Benefit of Employees")

Regards,