Section 10(14) of the Income Tax Act provides exemptions towards allowances and benefits granted to the employees to meet certain expenses. Rule 2BB of the Income Tax Rules prescribes the list of allowance which exempted under section 10(14)(i) of the Income Tax Act and section 10(14)(ii of the Income Tax Act.
The said exemption covered under section 10(14) read with rule 2BB is exhaustively explained under the current article.
Provisions of section 10(14)(i)provide exemption towards prescribed special allowance or benefits, granted to the employees, to meet expenses (wholly, exclusively, and necessarily) towards the performance of the official duty. The exemption is available only and only if the expenses are actually incurred by the employees.
Rule 2BB(1) lists down the prescribed allowances as-
1. Allowance granted to meet the cost of travel on tour or transfer.
2. Daily allowance granted to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
3. Conveyance allowance granted to meet the expenses incurred on conveyance in the performance of duties of an office. However, free conveyance should not be provided by the employer.
4. Helper allowance granted to meet the expenses incurred on helper who is engaged for the performance of duties of an office.
5. Research allowance granted for encouraging the research, academic and training pursuits ineducational and research institutions.
6. Uniform allowance granted to meet the expenses incurred on purchase / maintenance of uniform for wear during the performance of duties of an office.
Provisions of section 10(14)(ii)provide exemption towards the prescribed allowance granted to an employee to meet his personal expenses at either of the below place-
The amount of exemption is lower of the following-
Rule 2BB(2) lists down the prescribed allowances as-
1. Special compensatory allowance / climate allowance for working in a hilly area or high altitude or-
2. Border area allowance / difficult or disturbed area allowance / remote locality allowance-
3. Tribal or schedule or agency area allowance-
INR 200 per month for the states of Madhya Pradesh, Uttar Pradesh, Assam, Tamil Nadu, Karnataka, Tripura, West Bengal, Orissa, and Bihar.
4. Allowance to an employee working in a transport system to meet personal expenses while on duty- 70% of such allowance (maximum up to INR 10,000 per month).
5. Children Education allowance- INR 100 per month per child (up to a maximum of 2 children).
6. Allowance for employee’s child hostel expenses- INR 300 per month per child (maximum up to two children).
7. Compensatory field area allowance-
8. Modified Field Area Allowance-
9. Counter-insurgency allowance to members of armed forces- INR 3,900 per month.
10. Transport allowance granted to a disabled employee to meet his travel expense from his place of residence to place of duty- INR 3,200 per month.
11. Underground allowance to employees working in underground mines- INR 800 per month.
12. High altitude / uncongenial climate allowance granted to armed force members operating in high altitude areas-
13. Highly active field area allowance granted to armed force members- INR 4,200 per month.
14. Island allowance granted to armed force members-
Table – Articles on Section 10 Exemptions
|1||Section 10(1)– Exemption to Agricultural Income|
|2||Section 10(2) Exemption to amount received by co-parcener from HUF|
|3||Section 10(2A) Exemption towards share of income from firm/LLP|
|4||Exemptions towards interest to non-residents | Section 10(4) & 10(4B)|
|5||Exemption on Tax paid by Govt or Indian concern on certain income of a foreign company|
|6||Section 10(7) Perquisites/allowances exemption to Govt employees serving outside India|
|7||Exemption- Section 10(8A) & section 10(8B) of Income Tax Act|
|8||Exemption towards commuted value of pension Section 10(10A)|
|9||Exemption towards retrenchment compensation received by workman Section 10(10B)|
|10||Section 10(10BC) Exemption towards compensation received on account of any disaster|
|11||Section 10(10C) Exemption of amount received on voluntary retirement|
|12||Exemption towards tax paid by employer on non-monetary perquisites: Section 10(10CC)|
|13||Section 10(10D) Exemption towards amount received under a Life Insurance Policy|
|14||Exemption for amount received from Statutory & Recognized PF|
|15||Exemption for payment from approved superannuation fund Section 10(13)|
|16||Income Tax Exemption on prescribed allowances/ benefits | Section 10(14)|
|17||Section 10(15) Exemption- Interest on Bonds, Debentures, Securities|
|18||Scholarship exemption | Section 10(16) | Income Tax Act 1961|
|19||Exemption towards income for administration of Charitable or Religious Institution|
|20||Section 10(32) Exemption | Income of minor clubbed with parent|
|21||Exemption for dividend income received from Indian Company | Section 10(34)|
|22||Section 10(34A) Exemption towards income received by a shareholder on buy back of shares|
|23||Section 10(35) Exemption towards income received from units|
|24||Section 10(37) Exemption towards Capital Gain arising on Compulsory Acquisition of Urban Agricultural Land|