A uniform allowance is money given by employers to help employees buy and maintain the uniforms they need for work. It’s usually provided in jobs with specific dress codes, like the police, defence, healthcare, or airlines.
According to the Income Tax Act, this allowance is tax-free only up to the amount actually spent on the uniform. Also, this tax benefit is available only under the old tax regime.
What is a Uniform Allowance?
A uniform allowance is money that employers give to employees to help them buy and maintain the uniforms they must wear at work. This allowance is common in jobs where wearing a uniform is compulsory, such as in the police, defence services, healthcare, airlines, banking, and some private companies.
The allowance is part of your salary, but under the Income Tax Act, you can claim a tax exemption on the amount you actually spend on uniforms. If you don’t spend the full amount, the remaining balance becomes taxable income.
Uniform Allowance Exemption Limit
According to Section 10(14)(i) and Rule 2BB, the uniform allowance is treated as a special allowance. This exemption is not available under the new tax regime.
However, if you choose the old tax regime, you can claim an exemption up to the lower of these two amounts:
- The actual uniform allowance you receive from your employer, or
- The actual amount you spend on buying and maintaining uniforms.
Calculation of Uniform Allowance
When filing your income tax return, if you have received a uniform allowance, you can claim a tax exemption on the amount you actually spent on uniforms during the financial year — or the total allowance received, whichever is lower.
The uniform allowance usually covers expenses such as:
- Buying uniforms
- Tailoring or alteration charges
- Laundry and maintenance costs
- Accessories that are part of the uniform
Uniform Allowance Exemption Under the New Tax Regime
If you want to claim an exemption for uniform allowance, you should file your taxes under the old tax regime, as this benefit is not available in the new tax regime.
Final Word
In short, the uniform allowance exemption is available to employees who must wear a specific dress code or uniform for their job. They can claim a tax exemption on the amount they receive or actually spend on uniforms. However, this benefit can be claimed only under the old tax regime.
Frequently Asked Questions
1. Is uniform allowance taxable under the new tax regime?
Yes, under the new tax regime, the uniform allowance is fully taxable. You can only claim a deduction for it if you opt for the old tax regime while filing your income tax return.
2. How much uniform allowance can I claim?
As per Section 10(14)(i) of the Income Tax Act, you can claim an exemption for the actual amount spent on buying and maintaining uniforms for official purposes. There is no fixed upper limit for this exemption.
3. Where to show uniform allowance in ITR?
While filing your Income Tax Return (ITR), report the uniform allowance received under the section ‘Less allowances to the extent exempt u/s 10’. You can find this in ‘Part B – Gross Total Income’ of the ITR form.
4. What is a uniform allowance, and why is it given to employees?
A uniform allowance is a special allowance given by employers to help employees buy and maintain uniforms that they are required to wear at work.
5. Who is eligible for a uniform allowance?
There are no specific restrictions on who can claim this allowance. Any employee who receives a uniform allowance as part of their salary can claim an exemption under the old tax regime.
6. Are uniform allowances common across all industries?
Uniform allowances are more common in sectors where wearing a uniform is mandatory, such as healthcare, hospitality, aviation, and security. However, some corporate and retail companies also provide this benefit to their staff.
