As per the latest updates, DA is fully taxable for salaried employees. If the employee has been provided with an unfurnished rent-free accommodation, it becomes that part of the salary up to which it forms the retirement benefit salary of the employee, provided that all other pre-conditions are met.

What allowances are not taxable?

2. What are Non-Taxable allowances? The Allowances paid to Govt servants abroad, Sumptuary allowances, Allowance paid by UNO and Compensatory allowance paid to judges are non-taxable allowances.

Is dearness allowance an exempt income?

Dearness Allowance

As per the Income Tax Act, the entire amount of DA received is taxable and has to be declared at the time of filing income tax returns.