TA and DA are two important components of an employee’s salary structure in many organizations. TA stands for Travelling Allowance and DA stands for Dearness Allowance. These allowances are provided to compensate for the additional expenses incurred by employees during travel or due to inflation. In this article, we will dive deep into the full forms of TA and DA and understand their significance in the world of employment. Whether you’re an employee or an employer, this information is crucial to know and understand, so read on to get a clear understanding of TA and DA.
What is Travelling Allowance?
It is an amount paid to employees for covering the expenses of a business trip. This amount may cover the costs of airplane tickets, hotel accommodations, meals, transport, and any other things. Traveling allowance may also include the expenses of employees for traveling from their place of residence to the office. Traveling allowance may also be referred to as transport allowance or conveyance allowance. The basic difference between those two terms is:
- Transport Allowance: Covers expenses of commuting between the workplace and the place of residence. This is mostly for handicapped people.
- Conveyance Allowance: Covers expenses of business trips which cover the transport, stay, etc. bound to the rules. This has limitations with respect to tax exemption.
According to the 7th CPC Travelling Allowance, Central Government Employees in pay level 5 or below qualify for allowance to travel by First Class, AC-III, AC chair car by train. Employees who are in the pay level of 6 or above are eligible for an allowance for traveling by air.
Characteristics of Travelling Allowance
- Allowance can be for business tips covering the expenses such as travel tickets, hotel bills, etc.
- Allowance can be for covering expenses of commuting from the place of residence to the place of work.
- These mostly are fixed amounts and do not depend upon the total bill, that is there is a restriction on how much costs will be covered.
- Generally, the expenses are certain percentages calculated from the base salary.
- If employees’ expenses are more, then they have to cover the extra costs on their own.
- The costs covered vary for a physically disabled person, generally, the remuneration is more.
What is Dearness Allowance?
It is an amount paid to pensioners and public sector employees by the Government to balance out the effect of inflation. It is a fixed percentage of the basic salary.
DA rates change two times in a particular year. DA varies on the basis of the cost of living, which means it is not the same for two different places and depends upon the work location of the employee. This means that employees working in rural, urban, and suburban work locations have different rates for DA.
A salaried employee has to pay taxes on the Dearness Allowance.
Central Pay Commission (CPC) takes different aspects of salary into account. DA is also considered in the same.
Dearness Allowance is mainly of two types:
- Variable Dearness Allowance (VDA)
- Industrial Dearness Allowance (IDA)
1. Variable Dearness Allowance (VDA): It is applicable to the employees of the Central Government. Generally revised every six months to balance out the inflation.
2. Industrial Dearness Allowance (IDA): It is applicable to employees from Public Sector Units (PSUs) and also to pensioners by the Government.
History of Dearness Allowance
Starting from World War II, the Dearness Allowance was previously referred to as Dear Food Allowance. The calculation then was different for DA, than now. The rates get modified frequently by Government and are a certain percentage of the base salary.
Characteristics of Dearness Allowance
- Applicable to Government employees.
- VDA for employees of the Central Government.
- IDA for employees of PSUs and pensioners.
- Not compulsory for Private Sector Employees that private companies may or may not have policies for DA.
Difference Between TA and DA
TA (Travel Allowance) |
DA (Dearness Allowance) |
| TA is an amount paid to employees for covering the expenses of a business trip. | DA is an amount paid to pensioners and public sector employees by the Government to balance out the effect of inflation. |
| TA is only given when the employee is traveling on official duty. | DA is a regular allowance that is added to the employee’s salary on a periodic basis, usually quarterly or annually. |
| TA rates vary depending on the distance traveled and the mode of travel. | DA rates are fixed and are based on the percentage of the employee’s basic salary. |
| TA is usually reimbursed based on actual expenses incurred by the employee. | DA is not based on actual expenses and is a fixed amount. |
| TA is tax-free up to a certain limit as per income tax rules. | DA is taxable as per income tax rules. |
| The purpose of TA is to ensure that employees do not incur out-of-pocket expenses while on official duty. | The purpose of DA is to help employees maintain their standard of living and cope with inflation. |
Conclusion
Travel Allowance (TA) and Daily Allowance (DA) are fantastic benefits of an employee’s pay package. When traveling for work, they pay for things like hotel, meals, and transportation. If you qualify, you may receive pre-set rates or actual expense reimbursement; all you have to do is provide the receipts. Don’t let the fact that TA and DA are taxable bring you down. Just adhere to your company’s policies for a simple procedure. These expenses must be covered in order to facilitate official business travel and guarantee that workers are treated fairly.
FAQs
Q1. What is TA?
Ans: TA stands for Travel Allowance. It is an amount paid to employees for covering the expenses of a business trip.
Q2. What is DA?
Ans: DA stands for Daily Allowance. It is an amount paid to pensioners and public sector employees by the Government to balance out the effect of inflation.
Q3. Are TA and DA taxable?
Ans: TA and DA are taxable.
Q4. Who is eligible for TA and DA?
Ans: The eligibility criteria differ according to the policies of the organization.
Q5. Can Employees claim TA and DA for Personal Travel?
Ans: No, TA and DA are only provided for official business travel purposes.