Allowances are basically a part of an employee's remuneration package that intends to compensate for varied expenses as a significant part of the employment services. For instance, the fuel cost is compensated under the conveyance allowance. These monetary benefits are extended to help employees carry out their regular professional duties without any monetary burden. On the other hand, reimbursement is the money that the employer gives out to employees intending to compensate for their expenditures. These amounts are basically related to business expenditure and are not included in an employee's salary, thereby are free from any sort of tax liability.