Step 1: Go to left hand side menu -> HR Manager -> Salary structure.

Step 2: Edit salary structure in which you want to make changes for entitlement tax free.

Step 3: You will find column "Is Non Taxable" by default its no, make it yes according to your requirement.

Step 4: If you want to change this for only particular user then go to "Left hand side menu" -> "Payroll".

Step 5: Find the user for which you wish to change entitlement tax free, and click on edit structure for that user.

Step 6: You will find column "Is Non Taxable" by default its no, make it yes according to your requirement.