Exemptions and Taxability of
allowances to Salaried employees while computing taxable income: |
| S. No. |
Section |
Particulars |
Exemption
Limit |
Exemption
to |
| 1 |
|
Any
allowance or perquisite paid or allowed by Government to its employees posted
outside India |
Entire
Amount |
Individual-
Salaried Employee (citizen of India) |
| 2 |
- |
Allowances
to Judges of High Court/Supreme Court |
Exempt,
subject to certain conditions. |
Individual
- Judges of High Court/Supreme Court |
| 3 |
- |
Compensatory
allowance received by a Judge under article 222(2) of the Constitution |
Fully
Exempt |
Individual
- Judges |
| 4 |
- |
Salary
and allowances received by a teacher /professor from SAARC member state
(Subject to certain conditions). |
Fully
Exempt |
Individual
- Teacher from SAARC member State |
| 5 |
10(45) |
Following
allowances and perquisites given to serving Chairman/Member of UPSC is exempt
from tax: |
Fully
Exempt |
Individual
- Chairman/Member of UPSC |
| |
a)
Value of rent free official residence |
| |
b)
Value of conveyance facilities including transport allowance |
| |
c)
Sumptuary allowance |
| |
d)
Leave travel concession |
| 6 |
10(45) |
Allowances
to Retired Chairman/Members of UPSC |
Exempt
subject to maximum of Rs. 14,000 per month for defraying the services of an
orderly and for meeting expenses incurred towards secretarial assistant on
contract basis. |
Individual
- Retired Chairman/Member of UPSC |
| 7 |
- |
Allowances
paid by the UNO to its employees |
Fully
Exempt Individual - Government employee |
Individual
- Employees of UNO |
| 8 |
16 (ii) |
Entertainment
Allowance received by the Government employees (Fully taxable in case of
other employees) |
Least
of the following is exempt from tax: |
Individual
- Government Employee |
| a) Rs 5,000 |
| b) 1/5th of salary (excluding any allowance,
benefits or other perquisite) |
| c) Actual entertainment allowance received |
| 9 |
10(13A) |
House
Rent Allowance (Sec. 10(13A) & Rule 2A) |
Least
of the following is exempt: |
Individual
- Salaried employee |
| a) Actual HRA Received |
| b) 40% of Salary (50%, if house situated in
Mumbai, Calcutta, Delhi or Madras) |
| c) Rent paid minus 10% of salary |
| * Salary= Basic + DA (if part of retirement
benefit) + Turnover based Commission. |
| Note: |
| i. Fully Taxable, if HRA is received by
an employee who is living in his own house or if he does not pay any rent |
| ii. It is mandatory for employee to
report PAN of the landlord to the employer if rent paid is more than Rs.
1,00,000 [Circular No. 08 /2013 dated 10th October, 2013]. |
| 10 |
10(14) |
Children
Education Allowance |
Up
to Rs. 100 per month per child up to a maximum of 2 children is exempt |
-do- |
| 11 |
10(14) |
Hostel
Expenditure Allowance |
Up
to Rs. 300 per month per child up to a maximum of 2 children is exempt |
-do- |
| 12 |
10(14) |
Transport
Allowance is granted to an employee to meet expenditure on commuting between
place of residence and place of duty |
Up
to Rs. 1,600 per month (Rs. 3,200 per month for blind, deaf, dumb and
handicapped employees) is exempt |
-do- |
| 13 |
Sec. 10(14) |
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: |
-do- |
| |
a)
70% of such allowance; or |
| |
b)
Rs. 10,000 per month. |
| 14 |
10(14) |
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 |
-do- |
| 15 |
10(14) |
Any
Allowance to meet the cost of travel on tour or on transfer |
-do- |
-do- |
| 16 |
10(14) |
Daily
Allowance to meet the ordinary daily charges incurred by an employee on
account of absence from his normal place of duty |
-do- |
-do- |
| 17 |
10(14) |
Helper/Assistant
Allowance |
-do- |
-do- |
| 1 |
10(14) |
Research
Allowance granted for encouraging the academic research and other
professional pursuits |
-do- |
-do- |
| 2 |
10(14) |
Uniform
Allowance |
-do- |
-do- |
| 3 |
Sec. 10(14) |
Special
compensatory Allowance (Hilly Areas) (Subject to certain conditions and
locations) |
Amount
exempt from tax varies from Rs. 300 per month to Rs. 7,000 per month. |
-do- |
| 4 |
Sec.
10(14) read with Rule 2BB |
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 Rs. 200 per month to Rs. 1,300 per month. |
-do- |
| 5 |
Sec. 10(14) |
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 Rs. 200 per month |
-do- |
| 6 |
Sec. 10(14) |
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 Rs. 2,600 per month |
-do- |
| 7 |
Sec. 10(14) |
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 Rs. 1,000 per month |
-do- |
| 8 |
Sec. 10(14) |
Counter
Insurgency 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 Rs. 3,900 per month |
Individual
- Members of Armed Forces |
| 9 |
Sec. 10(14) |
Underground
Allowance is granted to employees working in uncongenial, unnatural climate
in underground mines |
Up
to Rs. 800 per month |
Individual
- Salaried employee |
| 10 |
Sec. 10(14) |
High
Altitude Allowance is granted to armed forces operating in high altitude
areas (Subject to certain conditions and locations) |
a)
Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet) |
Individual
- Members of Armed Forces |
| |
b)
Up to Rs. 1,600 per month (for altitude above 15,000 feet) |
| 11 |
Sec. 10(14) |
Highly active
field area allowance is granted to members of armed forces (Subject to
certain conditions and locations) |
Up
to Rs. 4,200 per month |
-do- |
| 12 |
Sec. 10(14) |
Island Duty
Allowance is granted to members of armed forces in Andaman and Nicobar and
Lakshadweep group of Island (Subject to certain conditions and locations) |
Up
to Rs. 3,250 per month |
-do- |
| 13 |
- |
City
Compensatory Allowance |
Fully
Taxable |
Individual
- Salaried employee |
| 14 |
- |
Fixed
Medical Allowance |
-do- |
-do- |
| 15 |
- |
Tiffin/Lunch/Dinner/Refreshment
Allowance |
-do- |
-do- |
| 16 |
- |
Servant
Allowance |
-do- |
-do- |
| 17 |
- |
Dearness
Allowance |
-do- |
-do- |
| 18 |
- |
Project
Allowance |
-do- |
-do- |
| 19 |
- |
Overtime
Allowance |
-do- |
-do- |
| 20 |
- |
Telephone
Allowance |
-do- |
-do- |
| 21 |
- |
Holiday
Allowance |
-do- |
-do- |
| 22 |
- |
Any
Other Cash Allowance |
-do- |
-do- |
| |
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