Every taxpayer who are liable to file Income Tax Return under the head Salary do knows very well that what are the allowances / exemptions available under the head salary that help them to save tax
Here we have made an effort to Summarize all Allowances /Exemptions available under the head Salaries of Tax Payers for AY 2018-19 [ F Y 2017-18]
Allowances / Exemptions Under the head Salaries
SL. No. | Section | Particulars | Limits of exemption | Exemption available to |
1. | 10(7) | Any allowance or perquisite paid or allowed by Government to its employees posted outside India | Entire Amount | Individual- Salaried Employee (being a 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 | |
4. | – | Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions). | Fully Exempt | |
5. | 10(45) | Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax: a) Value of rent free official residence b) Value of conveyance facilities including transport allowance c) Sumptuary allowance d) Leave travel concession | Fully Exempt | |
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. | |
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: a) Rs 5,000 b) 1/5th of salary (excluding any allowance, benefits or other perquisite) c) Actual entertainment allowance received | Individual – Government Employee |
9. | 10(13A) | House Rent Allowance (Sec. 10(13A) & Rule 2A) | Least of the following is exempt: 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]. | Individual – Salaried employee |
10. | 10(14) | Children Education Allowance | Up to Rs. 100 per month per child up to a maximum of 2 children is exempt | Individual – Salaried employee |
11. | 10(14) | Hostel Expenditure Allowance | Up to Rs. 300 per month per child up to a maximum of 2 children is exempt | Individual – Salaried employee |
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 | Individual – Salaried employee |
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: a) 70% of such allowance; or b) Rs. 10,000 per month. | Individual – Salaried employee |
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 | Individual – Salaried employee |
15. | 10(14) | Any Allowance to meet the cost of travel on tour or on transfer | Exempt to the extent of expenditure incurred for official purposes | Individual – Salaried employee |
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 | Exempt to the extent of expenditure incurred for official purposes | Individual – Salaried employee |
17. | 10(14) | Helper/Assistant Allowance | Exempt to the extent of expenditure incurred for official purposes | Individual – Salaried employee |
1. | 10(14) | Research Allowance granted for encouraging the academic research and other professional pursuits | Exempt to the extent of expenditure incurred for official purposes | Individual – Salaried employee |
2. | 10(14) |
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