What is a holiday allowance? #
Holiday allowance is the salary amount payable to an employee if he works on a declared holiday and the amount is fully taxable. Overtime salary is paid when the employee work on a normal calendar working day more than the shift hours.
Holiday allowance vs overtime #
Overtime salary is paid for the excess hours than the shift hours on a regular working day as per the hourly rate. Whereas holiday allowance is paid when an employee works on a declared holiday and with no regular shift hours on the day.
Holiday allowance vs Leave travel allowance (LTA). #
Leave travel allowance unlike holiday allowance is not fully taxable. LTA exemption can be claimed twice in a block of four financial years. When leave travel allowance is part of the employee CTC the employee can avail of LTA exemption for travel with his family inside India. Here, family means him, his wife, children, dependent parents, brothers, and sisters of the employee.
The following are the conditions to avail of LTA on travel
1. Economy class air ticket to the destination by the shortest possible route.
2. First class train ticket to the destination by the shortest possible route.
3. Any other transport with first class airconditioned to the destination by the shortest possible route which otherwise would have been equivalent to train travel.
