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Under the head Income from Salaries:
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S.no
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Particulars
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Section
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Threshold Limits (for exemptions and others)
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1.
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Standard Deduction (Individual – Salaried Employee)
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16(ia)
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Least of the following is exempt from tax:
a) Rs 40,000 or
b) Amount of salary whichever is lower
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2.
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Entertainment Allowance (Exempt in case of Government employee only)
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16(ii)
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Least of the following is exempt from tax:
a) Rs 5,000
b) 1/5th of salary (excluding any allowance, benefit or perquisite)
c) Actual entertainment allowance received
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3
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Encashment of unutilized earned leave at the time of retirement by an employee (other than Government employee)
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10(10AA)
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Least of the following shall be exempt from tax:
a) Amount actually received
b) Unutilized earned leave** X Average monthly salary
c) 10 months Average Salary**
d) Rs. 3,00,000
*While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer
**Average salary = Average Salary*** of last 10 months immediately preceding the retirement
***Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission
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4
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Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947
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10(10B)
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Least of the following shall be exempt from tax:
a) an amount calculated as per 10(10B)of the Industrial Disputes Act, 1947;
b) Rs. 5,00,000; or
c) Amount actually received.
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5.
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Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee)
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10(10)
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Least of following amount is exempt from tax:
1. (*15/26) X Last drawn salary** X completed years of service or part thereof in excess of 6 months.
2. Rs. 20,00,000
3. Gratuity actually received.
*7 days in case of employee of seasonal establishment.
** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite
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6
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Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act, 1972 (other than Government employee)
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10(10)
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Least of following amount is exempt from tax:
1. 1/2 X Average Salary* X Completed years of service
2. Rs. 10,00,000
3. Gratuity actually received.
*Average salary = Average Salary of last 10 months immediately preceding the month of retirement
**Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission
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7.
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Amount received on Voluntary Retirement or Voluntary Separation
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10(10C)
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Least of the following is exempt from tax:
1) Actual amount received as per the guidelines i.e. least of the following
(a) 3 months’ salary for each completed year of services
(b) Salary at the time of retirement X No. of months of services left for retirement; or
2) Rs. 5,00,000
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8.
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Children Education Allowance
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10(14)
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Up to Rs. 100 per month per child up to a maximum of 2 children.
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9.
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Hostel Expenditure Allowance
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10(14)
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Up to Rs. 300 per month per child up to a maximum of 2 children.
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10.
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Transport Allowance granted to an employee to meet expenditure on commuting between place of residence and place of duty
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10(14)
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Up to Rs. 3,200 per month for blind and handicapped employees
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11.
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Transport Allowance 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.
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10(14)
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Amount of exemption shall be lower of following:
a) 70% of such allowance; or
b) Rs. 10,000 per month.
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12.
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Allowances to Retired Chairman/Members of UPSC
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10(45)
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Up to Rs.14, 000 per month for defraying the service of an orderly and for meeting expenses incurred to wards secretarial assistance a contract basis.
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13.
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Special compensatory Allowance (Hilly Areas)
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10(14)
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Amount exempt from tax varies from Rs. 300 to Rs. 7,000 per month.
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14.
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Border area, Remote Locality or Disturbed Area or Difficult Area Allowance
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10(14)
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Amount exempt from tax varies from Rs. 200 to Rs. 1,300 per month.
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15.
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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
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10(14)
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Up to Rs. 200 per month
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16
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Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance
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10(14)
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Up to Rs. 2,600 per month
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17
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Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance
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10(14)
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Up to Rs. 1,000 per month
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18
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Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance
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10(14)
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Up to Rs. 3,900 per month
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19
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Underground Allowance to employees working in uncongenial, unnatural climate in underground mines
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10(14)
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Up to Rs. 800 per month
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20
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High Altitude Allowance granted to armed forces operating in high altitude areas
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10(14)
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a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet)
b) Up to Rs. 1,600 per month (for altitude above 15,000 feet)
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21
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Highly active field area allowance granted to members of armed forces
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10(14)
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Up to Rs. 4,200 per month
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22
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Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island
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10(14)
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Up to Rs. 3,250 per month
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