Taxability of allowances: employer granted allowances are taxable unless specific statutory exemptions apply for HRA, notified duty related and overseas allowances. Allowances paid by an employer to an employee are taxable as income unless specifically exempt. Key exemptions include house rent allowance subject to prescribed limits and salary definition, government notified allowances to meet duty related or posting related expenses (such as travel, remote area, tribal area, education and uniform allowances) subject to notification conditions, deduction for entertainment allowance under salary provisions, and exemption for allowances paid outside India by the Government to citizens serving abroad.