Uniform allowance is a financial benefit that employers provide to employees in jobs where wearing a uniform is mandatory—such as defence, healthcare, airlines, and government services. This allowance helps employees manage the cost of purchasing and maintaining uniforms, while also qualifying for tax exemption under the old tax regime.
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What is uniform allowance exemption?
Uniform allowance exemption allows employees to exclude the allowance received for uniforms from their taxable income. However, this benefit is available only when:
Wearing a uniform is a mandatory part of employment.
The allowance is spent entirely on purchasing and maintaining uniforms.
Employees maintain bills or receipts as proof of expenses.
Any unused portion of the allowance is treated as taxable income. Moreover, the employer must clearly list “uniform allowance” separately in the salary slip.
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