The Government of India provides certain exemptions under the Income Tax Act, which help reduce the tax burden on individuals and entities. Section 10 of the Income Tax Act, in particular, deals with various types of income that are exempt from tax. Understanding these exemptions can significantly reduce your overall tax liability and help you make informed financial decisions. This article provides a comprehensive guide on the most common exemptions under Section 10 of the Income Tax Act.
Section 10 of the Income Tax Act outlines specific incomes that are exempt from being included in the total taxable income. These exemptions apply to different income sources and are designed to provide tax relief to individuals and organizations. Understanding these exemptions is crucial when calculating your tax and filing your income tax returns.
Below are some of the key exemptions available under Section 10 of the Income Tax Act:
Section 10(10D) provides an exemption for any sum received under a life insurance policy, including the bonus. However, this exemption does not apply if the premium payable exceeds 10% of the sum assured or if the policy is taken for a specially-abled dependent family member.
This section provides an exemption for gratuity received by an individual from their employer. It is particularly relevant for private sector employees and outlines the conditions under which gratuity payments are exempt from tax exemption.
Dividends received from Indian companies are exempt up to ₹10,000 under Section 10(34). Any amount exceeding this limit is subject to tax.
You may also want to know Section 195 – TDS on Non-Residents
Section 10(13A) covers the exemption for HRA. The exemption is available under certain conditions, such as:
LTA exemptions are available for expenses incurred on domestic travel for work. The exemption is limited to air, bus, and train fares and does not cover expenses like hotel accommodation, food, and sightseeing.
Section 10(14)(i) allows exemptions for specific allowances provided by the employer, such as travel allowances, research allowances, and conveyance. These allowances are exempt from tax exemption if they are used for the purposes for which they are provided.
Taxpayers who are members of a Scheduled Tribe (ST) in Mizoram, Nagaland, Arunachal Pradesh, or Manipur are eligible for exemptions on income earned from dividends, interest, and more under Section 10(26).
Interest earned on a provident fund, whether upon resignation or retirement, is exempt from tax under Section 10(11).
Individuals who belong to Sikkim and earn income from sources within Sikkim or through dividends and interest on securities are eligible for exemptions under Section 10(26AAA).
Section 10(38) provides exemptions on long-term capital gains from the sale of equity shares or equity-oriented mutual funds, provided the Securities Transaction Tax (STT) is paid. This exemption is applicable only for gains earned until March 31, 2018.
This section provides exemptions for capital gains arising from the compulsory acquisition of urban agricultural land under a scheme approved by the Central Government.
Educational and medical institutions with annual receipts not exceeding ₹5 crore are eligible for exemptions under Section 10(23)(c).
Section 10(10A) provides tax exemptions on accumulated pension amounts received by government employees.
Under Section 10(14), internet and food allowances provided by the employer are exempt from tax. This section also includes other specific allowances provided for various purposes.
You may also want to know Section 206AA of Income Tax Act
Understanding the various exemptions under Section 10 of the Income Tax Act can significantly impact your tax exemption. Whether it’s HRA, LTA, or exemptions for specific income sources, these provisions are designed to offer tax relief. It is essential to familiarize yourself with these exemptions and make the most of them while filing your tax returns. Always consult a tax advisor to understand how these exemptions apply to your specific situation.
Section 10 of the Income Tax Act lists various income sources that are exempt from being included in the total taxable income, providing tax relief to individuals and organizations.
Yes, you can claim an exemption on HRA under Section 10(13A), subject to specific conditions related to your place of residence and the amount of rent paid.
Dividend income up to ₹10,000 is exempt under Section 10(34). Any amount exceeding this limit is subject to tax.
Long-term capital gains from the sale of equity shares or equity-oriented mutual funds are exempt under Section 10(38) if the Securities Transaction Tax (STT) is paid. However, this exemption applies only to gains earned until March 31, 2018.
Yes, accumulated pension amounts received by government employees are exempt under Section 10(10A).
Get the link to download the App
