Your income tax is the amount payable to the Government based on your gross income for the previous financial year. But there are certain exceptions in the income tax where these categories are known to be non-taxable. These categories are laid under Section 10 of the Income Tax Act, based on your income sources.
So, are you wondering what exemptions are made and whether you fit in any of the boxes? Read on to find out more about exemptions under section 10 and what documents are required to claim these deductions.
In Section 10 of income tax, the income that isn’t included in your total income when calculating the total tax liability is included. Such income is also known as exempted tax, and Section 10 of income tax includes the exemptions you make as a taxpayer.
The Union Budget 2022 allows several tax exemptions, including:
If you have agricultural income from land in India, you can get tax exemption under section 10 of income tax. The income can include the following:
If you earn HUF income, you can get tax exemptions under section 10 of income tax, provided if:
Under section 10 (2A) of income tax exemption, any profit earned as a partner or co-owner of a firm is exempted from tax. However, the partnership firm should be taxed and classified under Partnership Firm under the Income Tax Act of 1961, and the exemption is only limited to partners of a firm or LLP.
As an NRI from India, you can enjoy some exemptions that include:
Under section 10 (5) of income tax exemption, if you are an employee of a company, you can get an exemption on your travel leaves. You can enjoy this benefit if you are an Indian or foreign citizen. Here’s what you need to keep in mind:
Indian citizens who work outside India and represent the country are also eligible for exemptions under section 10 (6) of the income tax act. These are the people who are high commission officers, foreign state trade representatives, or officials of the embassy. Even foreign company employees can enjoy tax exemption benefits, but there are certain limitations:
Indian Government provided prerequisites and allowances to Indian employees serving their services outside India are subject to tax exemptions under section 10 (7) of income tax. Government employees can take benefit from this exemption.
Some employers pay non-monetary prerequisites on their employees’ behalf, leaving the employee to tax exemption.
Income tax under section 10 (10D) is subject to exemption upon maturity of your life insurance policy, but there are specific criteria to follow to enjoy this benefit:
Further, according to the Union Budget 2023, there are tax exemptions for life insurance policies issued after April 1st 2023, if:
Payment made from your Sukanya Samriddhi Account is subject to an exemption under section 10 (11). Moreover, contributions to your Provident Fund account also enjoy income tax exemption.
If you have received any compensation for natural disasters from the local, State, or Central Government, you can enjoy income tax exemption under section 10 (10BC).
The HRA is exempted from tax. So, any part of your salary that goes towards accommodation or rent is exempted from income tax with these conditions:
The exemption under section 10 (13A) is only received on the HRA you get
If your employer offers special allowances, you can benefit from tax exemptions. There’s no amount limit on the special allowances, but there are rules to where the allowance is used.
You are subjected to an exemption under section 10 (15) if you earn interest on your investments, like:
Exemptions Under Section 10
|Section 10 (1)||Earned through agriculture in India|
|Section 10 (2)||The amount received from HUF, including family income|
|Section 10 (3)||Up to ₹5,000 received from casual forms-up and to ₹2,500 for horse-racing|
|Section 10 (2A)||Exemptions on profits earned by being a company’s partner|
|Section 10 (4) (i) and (ii)||Interest paid to NRIs by transferring to a bank account or in-person|
|Section 10 (4B)||Interest paid to NRI with an Indian origin|
|Section 10 (5)||Concessions given to Indian employees for travel|
|Section 10 (6)||Income of an NRI received in India|
|Section 10 (6A), (6B), (6BB), (6C)||Earned from a foreign company|
|Section 10 (7)||Earned by government employees stationed abroad|
|Section 10 (8)||Earned by foreign employees in India under the Cooperative Technical Assistance Program|
|Section 10 (8A) and (8B)||Earned by a consultant’s assistant or a consultant|
|Section 10 (9)||Anything earned by the family of foreign employees working under the Cooperative Technical Assistance Program|
|Section 10 (10)||Earned after retirement or death gratuity under the Central Government’s pension rules|
|Section 10 (10A) and (10AA)||The amount earned by retirement leaves encashment and during retirement|
|Section 10 (10B)||Amount paid for relocation for a job|
|Section 10 (10BB) and (10BC)||Remittance received under the Bhopal Gas Leak Disaster Act 1985 or any other disaster|
|Section 10 (10CC) and (10D)
|Interest earned through a life insurance policy, prerequisites, and taxation|
|Section 10 (11), (12) and (13)||The amount earned through Provident Funds, Superannuation Funds, or recognised fund|
|Section 10 (14)||The amount given to conduct business expenses|
|Section 10 (15) (i) and (ii)||Notified premiums, interests, and redemptions on securities, bonds, and more|
|Section 10 (15) (iv)||Central, state or public sector employees receive interest deposits that the Government pays for retirement|
|Section 10 (15) (vi)||Notified interests on gold bond deposits|
|Section 10 (15) (vii)||Notified interests on local authority bonds|
Under section 10 of income tax, anyone below the age of 60 can claim tax exemption up to ₹2.50 Lakh; above 60, you can claim deductions up to ₹3 Lakh. You can claim deductions if you fit in any of the subsections of section 10.
As a salaried Indian professional, you can claim tax deductions under section 10 of income tax by filing your income tax return. Here’s everything you’ll need to make claims for deductions:
With the help of Section 10 of the Income Tax Act, you can make several exemptions if you fit into any of the mentioned categories. But to enjoy this benefit, you need to file your annual income tax every year and enable the advantage of avoiding paying tax for certain allowances.