Section 10 of the Income Tax Act lists the exemptions available to taxpayers. The individual can claim an exemption under this section for various types of incomes that they earn in a particular financial year. Section 10 has multiple subsections that allow exemptions for various types of incomes. One such subsection is Section 10 (11) of the IT Act.

 

Salaried employees are eligible for a tax exemption under Section 10 (11) of the Income Tax Act of 1961. Section 10 of the Income Tax Act exists to reduce the impact of tax structures such as rent allowances, children's education, travel allowances, gratuities, and so on.

 

Individuals are eligible for Provident Fund (PF) withdrawal exemption under Section 10(11). Furthermore, it also includes payments that they get from a Sukanya Samriddhi Yojana(SSY) Account. 

Exemption Limit of Section 10

Section 10 of the IT Act has a maximum limit of Rs.2.5 lakhs for individuals below 60 years of age and Rs.3 lakhs for individuals who fall between the ages of 60 and 80 years, and Rs.5 lakhs for individuals who are above 80 years of age or higher. The upper limit of Rs.3 and 5 lakhs is available for those Indian residents only. 

Payment from Statutory Provident Fund

Statutory Provident Fund

Contribution from Employer

Offering to such a fund is not considered as the employee’s income.

Interest

The interest credited to such a fund is exempt in the employee’s hand.

Payment received on termination

The lump sum received from such a fund at termination of service is exempt in the employee’s hand.

Calculation of interest taxable on contribution exceeding the specified limit:

  • For the first and second conditions to clauses 10(11) and 10(12), income through interest earned during the last year, which is not exempt from inclusion in the net income under the said clauses, will be calculated as the interest earned during the last year in the taxable contribution account.

  • For taxable interest calculation under sub-rule (1), separate accounts within the PF account will be maintained during the previous year 2021-22 and all subsequent years for non-taxable and taxable contributions made by a person.

Exemptions under Section 10(11) of the Income Tax Act

Under this clause of the Income Tax Act of 1961, some types of allowances are termed special allowances. These unique allowances are listed below for your convenience:

  • High court justices have been awarded exceptional allowances under this part of the income tax legislation.

  • Employees of the UNO are eligible for this benefit.

  • The sumptuary allowance is available to judges of the Supreme Court and the High Court.

  • This allowance is available to Indian citizens working as government employees in countries other than India.

Exemptions under Section 10 (11A) of Income Tax Act

This is a IT exemption for an individual who works outside of India and represents India in that nation, according to Section 10(11A) of the Income Tax Act:

  • These individuals, such as top-ranking Embassy officials, trade commissioners, and other officers, are entitled to the advantages of this provision.

  • Employees of foreign enterprises are also eligible for tax benefits under this act, subject to the following restrictions:

  • In India, a foreign company should not do any business or trade.

  • In India, an employee's living tenure should not exceed 90 days.

  • The employer's pay is not allowed to be deducted under this act.

Other Exemptions Under Section 10 of the IT Act

Some of the exemptions that are applicable under Section 10 of the Income Tax Act are:

  • Compensation for working in high-altitude or mountainous places are included in the climatic allowance.

  • Armed Forces troops stationed in the border area, distant locations, or troubled areas are paid an allowance under Rule 2BB of Section 10 (14)(ii).

  • Children's education fund: This Section 10 (14)(ii) exemption provides for a maximum of Rs 100 per kid, up to a total of two children.

  • Counterinsurgency allowance: Section 10 (14)(ii) directs a grant of Rs 3,900 per month to persons working in the Armed Forces for counterinsurgency.

  • Members of the Armed Forces stationed in the Andaman and Nicobar Islands or the Lakshadweep Group of Islands are eligible for an exemption of Rs 3,250 per month under Section 10 (14)(ii).

  • Daily allowance refers to daily pay granted to offset expenses spent on an official tour or while relocating to new employment.

  • Employees are given a travel allowance to cover their travel expenditures on an official tour or during a job transfer. It covers costs associated with moving personal belongings, for example.

  • Helper Allowance: This exemption is for the fee of a helper recruited to assist in the performance of official duties.

  • Uniform Allowance: If your office requires you to wear a uniform while on duty, you can get a uniform allowance to offset the cost of purchasing and maintaining your uniform.

  • Conveyance Allowance:This stipend is given to cover official travel costs. This does not cover the expense of transportation from home to work.

  • Exemption for Research or Academic Training: Educational and research institutions offer this exemption to encourage research or academic training, education, and other activities.

Frequently Asked Questions (FAQs)

What is the maximum that can be claimed under Section 10?

If the individual is younger than 60 years of age, then they can be exempted for up to Rs.2.50 lakhs and for senior citizens, the tax exemption limit is Rs.3 lakhs.

What is Section 10 (14) (ii)?

Under this section, employees are granted an allowance for working under certain conditions while on duty. The amount that is exempted is the money received as an allowance or the limit that is mentioned, whichever is lower.

Can the special allowance be more than the basic pay?

Yes, but only in certain circumstances. The norm is that the basic pay is usually higher than the special allowance. 

 

What is the Income Tax Act's Section 10?

Section 10 of the IT Act has a list of exemptions available to taxpayers, both non-salaried and salaried individuals.

What are the exemptions under Section 10?

Section 10 exempts LTA, voluntary retirement scheme, gratuity, Pension, encashment of leave, and HRA.

Earn interest up to 8.50% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable) Invest Now
Home
active_tab
Loan Offer
active_tab
Download App
active_tab
Credit Score
active_tab