Variable compensation · allowance
Shift and overtime allowance
Shift, night and overtime allowances are fully taxable — no exemption exists for them.
How the taxable value is determined
These are ordinary salary components taxed at slab rates in both regimes; Rule 2BB provides no exemption for shift or overtime pay.
Regime availability
- Old regime
- Prescribed value applies
- New regime
- Prescribed value applies
Documentation to keep
Payslip showing the allowance line.
Legal basis: Section 17(1), Income-tax Act
Frequently asked questions
Is shift and overtime allowance taxable in India?
Shift, night and overtime allowances are fully taxable — no exemption exists for them. These are ordinary salary components taxed at slab rates in both regimes; Rule 2BB provides no exemption for shift or overtime pay.
Does the exemption apply under the new tax regime?
Under the old regime this treatment is not applicable — the value is prescribed, not exempted; under the new regime it is not applicable — the value is prescribed, not exempted. Legal basis: Section 17(1), Income-tax Act.
What records should I keep for shift and overtime allowance?
Payslip showing the allowance line.
Related tools & guides
Reflects provisions in force for FY 2026-27; verify against the latest government publications (incometax.gov.in). Information, not tax advice.