Section 10 Of The Income Tax Act: All Exemptions Covered

Section 10 of the Income Tax Act 1961 specifies income generated from different sources, that are not included while summing up the total taxable income. These incomes are exempted from tax partially or fully as per different subsections.

Let’s look at some of the major exemptions that are covered under section 10:

• Income Fully-Exempted From Tax:
  

  Income Source	Section
  Any income generated from agriculture and related activities including rent from land/farmhouse used for agricultural purpose, further processing of the agricultural product, income from seeds or saplings, etc.	Section 10(1)
  Share of income received from the family income, being a part of a Hindu Undivided Family (HUF)	Section 10(2)
  Any amount received as a part of a life insurance plan including policy bonus	Section 10(10D)
  Any withdrawals from the provident fund (for salaried employees)	Section 10 (11) (12)
  Amount received as compensation from the government, in case of disasters	Section 10 (10BC)
  Income generated from tax-free securities	Section 10(15)
  Amount received as a loan (reverse mortgage scheme) in lump sum or instalments	Section 10(43)
  Amount received as a part of the New Pension Scheme	Section 10(44)



• Income Partially Exempted From Tax:



Income Source	Exemption Limit	Section
The amount received as a part of voluntary retirement benefits	Up to 5 lakhs	Section 10(10C)
HRA (House Rent Allowance) for salaried employees	Lowest of the following- 50% of salary for metro cities and 40% of salary for others HRA received from the employer Rent paid above 10% of the salary	Section 10 (13A)

Exemptions Under Section 10 (14)

Section 10(14) lists the tax-exempted allowances received by the employee while performing his employment duties. The exemption amount is the amount paid by the employer or the specified limit, whichever is lower.

Section 10 (14)(i)

The exemptions covered in this section are:

Type of Allowance	What it Covers	Exemption Limit
Daily allowance	Expenses made by an employee during work tour or transfer period.	Up to actual expense incurred
Travel allowance	Travel-specific expenses for work, which includes packaging and transportation costs during a tour or transfer.	Up to actual expense incurred
Conveyance allowance,	Transportation costs associated with the job includuing commuting expenses from home to work place.	Exempt up to Rs 19200 per annum
Helper Allowance	The costs of hiring a helper by an employee to assist in performing office duties if required.	Up to actual expense incurred
Uniform Allowance:	This is granted only in cases where there is a prescribed uniform for job hours. This allowance is towards expenses incurred in the purchase and maintenance of the uniform.	Up to actual expense incurred
Research or Academic Allowance:	It is mainly granted in educational or research institutes to promote training, research, and related academic work.	Up to actual expense incurred

Section 10(14)(ii)

The major exemptions covered in this section are:

Type of Allowance	What is it?	Exemption Limit
Climate Allowance	This allowance is granted as compensation for working in high-altitude regions and mountain areas such as Siachen in Jammu and Kashmir, hilly regions of the northeast, UP, and HP.	Up to Rs 7000 per month
Tribal Area Allowance	It is granted to employees for working in specific tribal, schedule, and agency areas.	Up to Rs 200 per month
Border Area Allowance	This allowance is mainly for army personnel posted in remote border areas.	Up to Rs 1300 per month
Island Duty Allowance	Granted to the army personnel serving in island areas such as Andaman and Nicobar, Lakshadeep, etc.	Up to Rs 3200 per month
Counter Insurgency Allowance	It is for army personnel for delivering duties away from their home states. An employee can avail of either this or border area allowance.	Up to Rs 3900 per month
Compensatory Field Allowance	Granted to employees working in specific remote fields such as Nagaland, Andhra Pradesh, Manipur, etc. An employee can either avail this allowance or border allowance.	Up to Rs 2600 per month
Children Education Allowance	A compensatory allowance for the education of children	Up to Rs 100 per child per month for up to 2 children

Claim Tax Exemptions to Lower Tax Burden

Apart from the above-discussed exemptions, there are several other categories for physically-disabled individuals and those working in mines and other sensitive areas. Look for categories applicable in your job profile or consult a tax advisor know the relevant exemptions under the section to reduce the overall tax burden.



DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.