Inner Line Allowance

Also known as Remote Area Allowances or Border Area Allowance or Remote Locality Allowance or Difficult Area Allowance or Disturbed Area Allowance, it is granted for people who work or give their service in a remote location, as an income support payment. It is a very common practice all over the world, including Europe, Australia and North America. This is given on the basis of remoteness of the location, number of persons in the family and distance from native place etc. Places are selected as per remote tax zones decided by the country administration. It is discontinued if the person has permanently moved to or from these areas.

Inner line allowance is not taxed. A person availing this allowance does not have to meet income or asset tests in order to receive the amount. Inner line allowance is reviewed if an employee changes his address.

In India the Inner Line Allowance is given under the following headings.

Types of Allowance Amount of Allowance1 Special Compensatory Allowance for hilly

areas or high altitude allowance or climate allowance.

Rs.800 common for various areas of North East, Hilly areas of UP, HP. & J&K and Rs. 7000 per month for Siachen area of J&K and Rs.300 common for all places at a height of 1000 meters or more other than the above places.

2 Border area allowance or remote area allowance or a difficult area allowance or disturbed area allowance

Various amounts ranging from Rs.200 per month to Rs.1300 per month are exempt for various areas specified in taxation rules

3 Tribal area/Schedule area/Agency area allowance

Rs.200 per month in MP, Assam, UP., Karnataka, West Bengal, Bihar, Odisha, Tamilnadu, Tripura

4 Compensatory field area allowance available in various areas of Arunachal Pradesh, Manipur Sikkim, Nagaland, H.P., U.P. & J&K

Rs.2600 per month

5 Special allowance in the nature of high altitude allowance granted to members of the armed forces

Rs. 1060 p.m. (for altitude of 9000-15000 ft.) Rs.1600 p.m. (for altitude above 15000 ft.)

6 Island (duty) allowance to armed force working at Andaman & Nicobar & Lakshadweep Islands

Rs. 3250 p.m.

(Source: Income Tax Department, Government of IndiaMinistry of Finance, Government of India)