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Exempted Incomes (Tax-FREE): Section-10(13A),Section-10(14),Section-10(15)

 

26. House Rent Allowance [Section 10(13A) Read with Rule 2A]

As per section 10(13A), read with rule 2A, the exemption in respect of HRA will be lower of the following amounts:

 

(1)       50% of salary, when residential house is situated at Mumbai, Kolkata, Delhi or Chennai and 40% of salary where residential house is situated at any other place.

 

(2)       HRA actually received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year.

 

(3)       Rent paid in excess of 10% of salary.

 

Salary will include basic salary, dearness allowance forming part of salary while computing all retirement benefits and commission based on fixed percentage of turnover achieved by the employee. Apart from this, salary for this purpose does not include any other allowances/perquisites.

 

Salary for this purpose shall be computed on due basis in respect of period during which the accommodation is occupied by the employee in the previous year. Hence, any payments not pertaining to the previous year or not pertaining to the period of occupation of the accommodation shall be excluded.

27. Any Allowance given for meeting Business Expenditure [Section 10(14)]

As per section 10(14), read with rule 2BB following allowances granted to an employee are exempt from tax subject to certain limit:

 

Allowances

Exemption Limit

Children Education Allowance

Up to Rs. 100 per month per child up to a maximum of 2 children is exempt

Hostel Expenditure Allowance

Up to Rs. 300 per month per child up to a maximum of 2 children is exempt

Transport Allowance 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 and handicapped employees) is exempt

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

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

Travelling Allowance to meet the cost of travel on tour or on transfer

Exempt to the extent of expenditure incurred for official purposes

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

Helper/Assistant Allowance

Exempt to the extent of expenditure incurred for official purposes

Research Allowance granted for encouraging the academic research and other professional pursuits

Exempt to the extent of expenditure incurred for official purposes

Uniform Allowance

Exempt to the extent of expenditure incurred for official purposes

Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)

Amount exempt from tax varies from Rs. 300 to Rs. 7,000 per month.

Border area, Remote Locality or Disturbed Area or Difficult Area Allowance (Subject to certain conditions and locations)

Amount exempt from tax varies from Rs. 200 to Rs. 1,300 per month.

Tribal area allowance in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa

Up to Rs. 200 per month

Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance(Subject to certain conditions and locations)

Up to Rs. 2,600 per month

Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance(Subject to certain conditions and locations)

Up to Rs. 1,000 per month

Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)

Up to Rs. 3,900 per month

Underground Allowance to employees working in uncongenial, unnatural climate in underground mines

Up to Rs. 800 per month

High Altitude Allowance granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)

a)  Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet)

b)  Up to Rs. 1,600 per month (for altitude above 15,000 feet)

Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations)

Up to Rs. 4,200 per month

Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations)

Up to Rs. 3,250 per month

28. Interest Incomes [Section 10(15)]

Interest incomes which are exempt under section 10(15) could be explained with the help of the following table-

Section

Income

Exemption to

10(15)(i)

Interest, premium on redemption, or other payment on notified securities, bonds, certificates, and deposits, etc. (subject to notified conditions and limits)

All assesses

10(15)(iib)

Interest on notified Capital Investment Bonds notified prior to 1-6-2002

Individual/HUF

10(15)(iic)

Interest on notified Relief Bonds

Individual/HUF

10(15)(iid)

Interest on notified bonds (notified prior to 1-6-2002) purchased in foreign exchange (subject to certain conditions)

Individual - NRI/ nominee or survivor of NRI / individual to whom bonds have been gifted by NRI

10(15)(iii)

Interest on securities

Issue Department of Central Bank of Ceylon

10(15)(iiia)

Interest on deposits made with scheduled bank with approval of RBI

Bank incorporated

Abroad

10(15)(iiib)

Interest payable to Nordic Investment Bank

Nordic Investment Bank

10(15)(iiic)

10(15)(iiic) Interest payable to the European Investment Bank on loan granted by it in pursuance of framework agreement dated 25-11-1993 for financial corporation between Central Government and that bank

European Investment bank

10(15)(iv)(a)

Interest received from Government or from local authority on moneys lent to it before 1-6-2001 or debts owed by it before 1-6-2001, from sources outside India

All assessees who have lent money, etc., from sources outside India

10(15)(iv)(b)

Interest received from industrial undertaking in India on moneys lent to it under a loan agreement entered into before 1-6-2001

Approved foreign financial institution

10(15)(iv)(c)

Interest at approved rate received from Indian industrial undertaking on moneys lent or debt incurred before 1-6-2001 in a foreign country in respect of purchase outside India of raw materials, components or capital plant and machinery, subject to certain limits and conditions

All assessees who have lent such money, or in favour of whom such debt has been incurred

10(15)(iv)(d)

Interest received at approved rate from specified financial institutions in India on moneys lent from sources outside India before 1-6-2001

All assessees who have lent such moneys

10(15)(iv)(e)

Interest received at approved rate from other Indian financial institutions or banks on moneys lent for specified purposes from sources outside India before 1-6-2001 under approved loan agreement

All assessees who have lent such moneys

10(15)(iv)(f)

Interest received at approved rate from Indian industrial undertaking on moneys lent in foreign currency from sources outside India under loan agreement approved before 1-6-2001

All assessees who have lent such moneys

10(15)(iv)(fa)

Interest payable by scheduled bank, on deposits in foreign currency when acceptance of such deposits by bank is approved by RBI

Non-resident or individual/HUF who is not ordinarily resident in India

10(15)( iv)(g)

Interest received at approved rate, from Indian public companies eligible for deduction under section 36(1)(viii) and formed with main object of providing long-term housing finance, on moneys lent in foreign currency from sources outside India under loan agreement approved before 1-6-2003

All assessees who have lent such moneys

10(15)( iv)(h)

Interest received from any public sector company in respect of notified bonds or debentures and subject to certain conditions

All assesses

10(15)( iv)(i)

Interest received from Government on deposits in notified scheme out of moneys due on account of retirement

Individual –Employee of Central Government/ State Government/Public sector company

10(15)(v)

Interest on securities held in Reserve Bank’s SGL A/c No. SL/DH-048 and Deposits made after 31-3-1994 for benefit of victims of Bhopal Gas Leak Disaster held in such account with RBI or with notified public sector bank

Welfare Commissioner, Bhopal Gas Victims, Bhopal

10(15)(vi)

Interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015

All assesses

10(15)(vii)

10(15)(vii) Interest on notified bonds issued by a local authority/State Pooled Finance Entity

All assesses

10(15)(viii)

Interest on deposit made on or after 1-4-2005 in an Offshore Banking Unit referred to in section 2(u) of the Special Economic Zones Act, 2005

Non-resident or person who is not ordinarily resident

 

 
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