Allowances are like the financial benefits a salaried person receives from his or her employer, which helps the former reduce the tax burden. Allowances are divided into different categories and employees can claim monthly payments. These benefits help when filing an income tax return (ITR) containing information such as net tax liability, tax withholding claims, and an overview of total taxable income. Taxpayers are required to file an ITR every year. As 2023 begins, it’s important to understand the different allowances and their tax benefits. This will come in handy when filing an ITR to further reduce income tax liability.
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