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Hello and fixed specified purpose the employer phase are 13 some and also species for what purpose the employee has to use it for example if the employer fail of the employee which popularly known as uniform allowance for the purpose of taxation further classified into fully taxable, fully exempt, partly taxable, all allowance falling under this category or entirely taxable under fully taxable allowance in other words no exemption will be provided even if these are spent for specific purpose dearness allowance popularly abbreviated as da weather forming part or not dearness allowance is fully taxable there are two types of dearness allowance where either Holy or partially is taken for computing retirement benefits then the bath which is taken for computation is known as forming part anything other than farming part will be categories does not forming part City compensatory 11 popularly abbreviated as CCA paid towards meeting high cost of living medical allowance entertainment allowan for non Government employees lunch servant other personal like overtime family defend deputation project extra the other one is fully exempt Indus paid to higher Commissioner ambassadors Government employees rendering service outside India this or not taxable in hand of the recipe and project allowance paid outside India any 11 paid to High Court Judges under section 22 C2 of the High Court Judges condition of service Act 1954 and any allowance paid to Supreme Court Judges us 23 B of Supreme Court Judges condition of service Act 1958 and paid by the United States Organisation of 12th employees basic pay is the fundamental pay upon which other calculation are made basic pay is further divided into fixed and grade system grade system of pay is the methodology by which increments or predetermined and employee will know his future basic salary in advance grade system is prevalent in government sector PSU and banks fixed basic pay as the name indicates a certain sum of money bonus paid during festive or other occasions fixed basic pay as the name to paid in appreciation of performance Commission normally computer as a percentage of sale of profit and computer pension received periodically by an employee after retirement we shall deal with this more elaborately later all items falling below this
are fully taxable. 
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