Section 10(14) of the Income Tax Act

What is Section 10 of the Income Tax Act?

Section 10 is a provision of the Income Tax Act, 1961 that provides for the various types of income that are exempt from taxation while filing your Income Tax Returns (ITR). It includes provisions for exemptions for the following:

• Specific allowances and perquisites

• Agricultural income

• Travel allowances

• House Rent Allowance (HRA)

• Special Compensatory Allowance

• Tribal Area Allowance

• Incomes of certain institutions

Section 10 of the IT Act aims to reduce your tax burden by allowing tax exemptions for specified incomes.

What is Section 10(14) of the Income Tax Act?

Section 10(14) is a subsection of Section 10 of the Income Tax Act, 1961 in relation to specific allowances provided to employees, which are exempt from taxation. These are the allowances given to employees for covering expenses while performing their official duties. 

The Section 10(14) is Divided into Two Categories: 

• Section 10(14)(i): The allowances that are exempted to the limit of the actual amount spent.

• Section 10(14)(ii): The allowances that are exempted up to the specified limit set by the government. 

Section 10(14) helps you to reduce your taxable income by providing documents of legitimate work-related expenses.

Features of Section 10(14) of the Income Tax Act, 1961

The key features of Section 10(14) and its sub-sections, Section 10(14)(i) and Section 10(14)(ii) are as follows:

• Tax Benefits: Section 10(14) provides tax exemptions on specific allowances and benefits, reducing your payable taxes.

• Allowance Types: Covers allowances for official travel, special duties, house rent, and other compensations.

• Eligibility: Employees and officials under specified conditions can avail of these tax exemptions.

Eligibility Criteria to Avail of Exemptions under Section 10(14)

The following category of individuals are eligible to avail of tax exemptions under Section 10(14)(i) and Section 10(14)(ii):

• United Nations Organisation (UNO) employees

• Employees of the Government of India who are placed outside of India

• Supreme Court and High Court Judges

• Supreme Court and High Court judges who are entitled to receive Sumptuary Allowance

• Central, state, and local government employees

Section 10(14)(i) Exemptions List

Allowances under Section 10 (14)(i) are exempt up to the amount received or the amount spent on specific duties, whichever is lower.

• Daily Allowance: For daily expenses during tours or transfers, provided when not at the usual place of duty.

• Travel Allowance: Covers travel costs during tours or transfers, including moving personal belongings.

• Research/Academic Allowance: Encourages academic and research training or professional duties.

• Conveyance Allowance: For travel expenses incurred for official duties, excluding home-to-work travel (covered under 'Transport Allowance' and not tax-exempt).

• Helper Allowance: Granted when an employer allows hiring a helper for official duties.

• Uniform Allowance: For purchasing or maintaining uniforms required for official duties.

Documentation for Section 10(14)(i):

Generally, no need to furnish expense details unless disproportionate to salary or duties; simple declarations are usually sufficient, and detailed proof is rarely required.

Section 10(14)(ii) Exemptions List

Allowances under this section are exempt up to the amount received or the limit specified by the government, whichever is lower.

• Children's Education Allowance: ₹100 per month for each child, up to two children.

• Compensatory Allowance (High Altitude/Climate): ₹800 for specific hilly areas, ₹7,000 for Siachen, ₹300 for general high-altitude areas.

• Scheduled/Tribal Area Allowance: ₹200 in specified states.

• Border/Remote/Difficult Area Allowance: ₹200 to ₹1,300 per month as per Rule 2BB.

• Transport System Allowance: 70% of allowance up to ₹10,000 per month.

• Field Area Allowance: ₹2,600 per month in specified areas.

• Children's Hostel Allowance: ₹300 per month for each child, up to two children.

• Counter Insurgency Allowance (Armed Forces): ₹3,900 per month.

• Transport Allowance (Physically Disabled): ₹1,600 per month.

• Transport Allowance (Commute): ₹1,600 per month.

• Compensatory Allowance (Modified Field Area): ₹1,000 per month in specified areas.

• Island Duty Allowance (Armed Forces): ₹3,250 per month in Andaman & Nicobar and Lakshadweep.

• Underground Mines Allowance: ₹800 per month.

• Special Compensatory Highly Active Field Area Allowance: ₹4,200 per month.

• High Altitude Allowance (Armed Forces): ₹1,060 per month (9,000 - 15,000 ft.) and ₹1,600 per month (above 15,000 ft.).

How to Claim Exemptions under Section 10?

You need to follow the standard procedure for filing your income tax return to claim an exemption under Section 10.

• Gather all necessary information related to your income and eligible Section 10 exemptions.

• Choose either physical forms from the Income Tax Department or opt for e-filing through the official website or authorized platforms.

• Accurately disclose all sources of income in your Income Tax Return (ITR), including those eligible for Section 10 exemptions (e.g., dividends, capital gains, agricultural income).

• Clearly specify the exemptions you are claiming under Section 10, including relevant subsections or clauses.

• Provide supporting documents, such as investment proof or certificates, as required by the specific exemption.

• Double-check your tax return for accuracy and completeness, then submit it electronically or by post as prescribed.

• Keep copies of your filed tax return and supporting documents for future reference or potential audits.

Important Tax- Exemption Sections of Section 10 of the Income Tax Act