What is Section 10 of the Income Tax Act?

Section 10 of the Income Tax Act is meant for salaried individuals. This section's provisions aim to reduce total taxable income by covering salary components such as rent allowance, travel allowance, gratuity, etc. If you are a salaried employee and want to learn about the tax benefits available to you under this section, keep reading.

List of Exemptions Under Section 10

The list of deductions under section 10 is extensive, as are the provisions contained within it. As such, we have selected the most important ones and have provided brief information related to them.

• Section 10(1)

  Section 10(1) is about agricultural income. This section defines agriculture income as earnings from the sale of agricultural products, earnings from the farmhouse, and income from agricultural operations such as tilling, cultivation, and sowing.

• Section 10(2)

  This section's provisions apply to any amount received from family income. It also deals with earnings from impartible assets and the income derived by a HUF member from the family estate.

• Section 10(2a)

  This section states that any income made by any partner of a limited liability partnership or a partnership firm from the firm's total earnings is tax-free. The primary objective of this section is to avoid double taxation.

• Section 10(4)

  If you are a non-resident Indian (NRI), you can get a tax exemption on the interest income from bonds, NRE bank accounts, and so on. However, you will find various conditions attached to this section that must be met in order to receive tax benefits.

• Section 10(5)

  This section deals with the travel concession allowance. Under this, the allowance provided by your employer is exempt if you spend it on travelling through public transport like railway, airways, or bus. In case you spend it on hotel reservations, food, or other things, you won't get any tax benefit under this section.

• Section 10(6)

  Income tax section 10(6) provides an exemption if you work in a foreign nation but are representing India in that country. The section will be applicable to you if you fall under any of the following categories.
  • High Commission
  • Embassy
  • Individuals employed in a foreign ship
  • Trade commissioner
  Not only that, but you can get tax breaks under this section if you work for a foreign company that does not have a presence in India. Another requirement as an employee of a foreign company is that your stay in India does not exceed 90 days.

   

• Section 10(7)

  You can receive tax benefits under this section if you are employed with the government. This section states that any allowance or perquisite provided to a government employee for performing services outside of India is tax-free.

• Section 10(14)(1)

  According to this section, any allowance that you receive from your employer to meet the expenses necessary for performing your duties is exempt from taxes. Go through the pointers below to learn more about allowances exempt under this section.
  • Travel allowance provided by your employer to cover travel expenses related to an official tour or transfer.
  • Conveyance allowance provided by your employer to cover transportation costs incurred while performing office-related duties.
  • A uniform allowance is provided to help you buy or maintain your official uniform.
  • Daily allowance provided by your employer to cover the necessary expenses for performing official duties while away from your regular place of work.
  • Some employers also provide research allowances for academic training, encourage research, and so on. Such an allowance is exempt from tax.

Conclusion

Section 10 of the Income Tax Act also includes provisions for tax breaks on life insurance policies (Section 10(10D)) and statutory provident funds (Section 10(11)). There are numerous other subsections that can help you reduce your tax liability. As a result, it is recommended that you pay close attention to this section when filing your ITR. You can also use an online tax calculator to make the calculation process appear simple. 

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