Salary Specific Exemption under section 10 - Income Tax - Ready Reckoner - Income Tax

Salary Specific Exemption under section 10 Section Particulars (For conditions / details see the relevant clauses) Limit of Exemption 10(5) r.w. Rule 2 Leave travel concession or assistance (LTA) provided by an employer to his Indian Citizen Employees Actual amount spent or Amount prescribed whichever is lower. Only 2 journeys in a block of 4 years is exempt 10(7) Any allowance or perquisite paid or allowed by Government to its employees posted outside India and who are citizens of India, for rendering services outside India. However, Basic salary shall be taxable in India. Entire Amount 10(10) Gratuity Please refer chapter of Salary 10(10A) Pension Please refer chapter of Salary 10(10AA) Leave Encashment Salary Please refer chapter of Salary 10(10B) Retrenchment Compensation Exempt of the least amount from the following: Actual amount received 5,00,000 15 days average pay x completed year of service or part thereof in excess of 6 months 10(10BB) Payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 or scheme Fully Exempt 10(10C) read with Rule 2BA Voluntary Retirement Exempt up to the extent of 5,00,000 For details please refer chapter of Salary. 10(10CC) Tax on non-monetary perquisites paid by employer Exempt to the extent of tax paid by the employer. 10(11) Any payment from a provident fund Fully Exempt, Proviso for taxability on interest income of the fund has been inserted by Finance Act, 2021. For details please refer chapter of Salary 10(11A) Any payment from an account, opened in accordance with the Sukanya Samriddhi Account Rules, 2014 Fully Exempt 10(12) The accumulated balance due and becoming payable to an employee participating in a recognised provident fund Subject to conditions in rule 8 of part A of the Fourth Schedule. Proviso for taxability on interest income of the fund has been inserted by Finance Act, 2021. For details please refer chapter of Salary 10(12A) Any payment from the National Pension System Trust to an ASSESSEE (FA 2018, w.e.f 01-04-2019) on closure of his account or on his opting out of the pension scheme referred to in section 80CCD to the extent it does not exceed 60% of the total amount payable to him at the time of closure of his account or on his opting out of the pension scheme. Shall be fully exempt. 10(12B) Any payment from the National Pension System Trust to an employee under the pension scheme referred to in section 80CCD , on partial withdrawal Subject to upper limit as specified 10(13) Any payment from an approved superannuation fund Subject to conditions. For details please refer chapter of Salary. 10(13A) read with Rule 2A House Rent Allowance Exemption of HRA will be available up to the minimum of the following three options: Actual house rent allowance received from your employer Actual house rent paid by you minus 10% of your basic salary 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro. For details refer chapter of Salary. 10(14) i. Children Education Allowance Up to 100 per month per child up to a maximum of 2 children is exempt 10(14) ii. Hostel Expenditure Allowance Up to 300 per month per child up to a maximum of 2 children is exempt 10(14) iii. Transport Allowance is granted to an employee to meet expenditure on commuting between place of residence and place of duty Up to 1,600 per month (3,200 per month for blind and handicapped employees) is exempt 10(14) iv. Allowance granted to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. Amount of exemption shall be lower of following: a) 70% of such allowance; or b) 10,000 per month. 10(14) v. Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office Exempt to the extent of expenditure incurred for official purposes 10(14) vi. Any Allowance to meet the cost of travel on tour or on transfer Exempt to the extent of expenditure incurred for official purposes 10(14) vii. Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty Exempt to the extent of expenditure incurred for official purposes 10(14) viii. Helper/Assistant Allowance Exempt to the extent of expenditure incurred for official purposes 10(14) ix. Research Allowance granted for encouraging the academic research and other professional pursuits Exempt to the extent of expenditure incurred for official purposes 10(14) x. Uniform Allowance Exempt to the extent of expenditure incurred for official purposes 10(14) xi. Tribal area allowance in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa Up to 200 per month 10(14) xii. Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) Up to 2,600 per month 10(14) xiii. Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) Up to 1,000 per month 10(14) xiv. Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines Up to 800 per month 10(14) xv. Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations) Amount exempt from tax varies from 300 per month to 7,000 per month. 10(14) read with Rule 2BB xvi. Border area allowance Remote Locality or allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations) Amount exempt from tax varies from 200 per month to 1,300 per month. 10(14) xvii. High altitude allowance(uncongenial climate) Given to the members of armed forces. For altitude of 9000 ft. to 15000 ft. ₹1,060 p.m. above 15000 ft.₹1,600 p.m. 10(14) xviii. Special Compensatory highly active field area allowance granted to members of armed forces. Exempt to the extent of ₹4,200 p.m. 10(14) xix. Island (duty) allowance given to the members of armed forces in the Andaman Nicobar and Lakshadweep Groups of Islands Exempt to the extent of ₹3,250 p.m.