Section 10 of Income Tax Act: Exemptions Allowed, Eligiblity, Documents Required
If you are a tax-paying citizen of India, you must have sometimes felt the rigidity of the law, praying for some exemptions. The Indian Government tries to make it easier with Section 10 of the Income Tax Act. It provides that the salaried employees can enjoy certain income tax exemptions to reduce tax burdens.
Are you wondering about what kinds of exemptions you might be getting from your income tax? This article will help you learn about these exemptions and the documents for claiming these.
What Is Section 10 of the Income Tax Act?
Section 10 of the Income Tax Act aims at putting forward all the exemptions professional can get while paying income tax. While this section hardly includes the word "exemption", it focuses on income sources that do not form a part of the total income. Therefore, this total income is mainly calculated when analysing the total amount of tax liability of professional.
Thus, if you wonder what Section 10 in income tax is, this section divides into several subsections to discuss the various forms of tax exemptions one can get while paying income tax.
What Are the Exemptions Allowed Under Section 10 of the Income Tax Act?
Various forms of tax exemptions are allowed under Section 10 of the Income Tax Act, as per the Union Budget 2022. All the subsections specifying tax exemptions are discussed in the following.
| Section and Subsections | Forms of Tax Exemption |
|---|---|
| Section 10 (1) | Earnings through agricultural means in India |
| Section 10 (2) | Income or any amount achieved through a coparcener from a HUF (Hindu undivided family), which includes the family income |
| Section 10 (3) | Income received via casual forms up to ₹5000 and up to ₹2500 for occasions like horse-racing |
| Section 10 (2A) | Income received from the profit of being a partner to a company |
| Section 10 (4) (i) and (ii) | Any interest amount paid to a non-resident of India in person or transferred through a bank account |
| Section 10 (4B) | Any interest amount paid to a non-resident of India but an Indian by origin |
| Section 10 (5) | Any concession is given to employee to travel in India |
| Section 10 (6) | Any income of a non-Indian citizen made or received in India |
| Section 10 (6A), (6B), (6BB), (6C) | Government tax levied on the earnings of a foreign company |
| Section 10 (7) | Allowances that government employees receive while being stationed abroad |
| Section 10 (8) | Income earned under Cooperative Technical Assistance Program by foreign employees working in India |
| Section 10 (8A) and (8B) | Earnings of a consultant, or the consultant’s staff |
| Section 10 (9) | Income of the family members of foreign employees under Cooperative Technical Assistance Program |
| Section 10 (10) | Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government |
| Section 10 (10A) and (10AA) | Any commuted amount earned during retirement and the amount made via encashment of leaves during retirement |
| Section 10 (10B) | Compensation that workers get for relocation in job |
| Section 10 (10BB) and (10BC) | Any remittance obtained according to the Bhopal Gas Leak Disaster Act 1985 or in the event of any disaster |
| Section 10 (10CC) and (10D) | Any amount received through taxation, perquisites and life insurance policy |
| Section 10 (11), (12) and (13) | Any amount received through Statutory Provident Fund, an authorised or recognised Fund or via a Superannuation Fund |
| Section 10 (14) | Allowance utilised for meeting business expenses |
| Section 10 (15) (i) and (ii) | Redemptions, interests, premiums obtained from bonds, securities, etc. which are notified. |
| Section 10 (15) (iv) | Interest on deposits of state government, central government or public sector employees paid by the government for retirement. |
| Section 10 (15) (vi) | Interest received upon gold bond deposits, which are notified. |
| Section 10 (15) (vii) | Interest received on local authority bonds, which are notified. |
Who Is Eligible to Claim Exemption Under Section 10 of the Income Tax Act?
Usually, people below the age of 60 are eligible to get a basic tax exemption limit of ₹ 2.50 Lakhs. For senior citizens, the exemption limit is up to ₹ 3 Lakhs. However, the various conditions and subsections under Section 10 of the Income Tax Act apply to any Indian salaried professional.
Documents Required to Claim Exemption Under Section 10 of the Income Tax Act
If you are eligible for income tax exemption under Section 10, you must inform the Government by filing an income tax return. For this, you need to keep the following documents handy.
- PAN card
- Aadhaar card
- Bank statement/bank passbook
- Income tax login credentials
Thus, as you can see, Section 10 of the Income Tax Act mainly focuses on the various types of income tax exemptions for Indian salaried citizens. Different subsections in this section of the act legally enable you to avoid paying taxes under specified incomes and allowances. However, you need to file an income tax return for maintaining these exemptions from your annual income.
Frequently Asked Questions
Is HRA fully exempted?
HRA (House Rent Allowance) is not fully taxable even though it is a part of your salary. This is because Section 10 (13A) of the Income-tax Act exempts part of the HRA.
Is the maturity proceed of your life insurance policy taxable?
According to Section 10 (10D) of the Income Tax Act, you enjoy tax exemptions on the maturity proceeds of your life insurance policy if the premium you have paid does not exceed 10% of the sum assured for any year.