Special Allowances under Section 10 for Salaried Employees
Special Allowances under Section 10 for Salaried Employees under the Income Tax Act covers a wide range of allowances ranging from house rent and leave travel allowance to research/academic allowance and uniform allowance.
Salaried employees get a fixed quantity of money or other forms of allowances apart from their salary for specific requirements of the employees. Most allowances are a part of the total income unless they come under some specific exemption under the Income Tax Act. Allowances are given to employees for their services or as compensation for working in unusual conditions.
Section 10 of the Income Tax Act covers many allowances such as Leave Travel Allowance, Uniform Allowance, Travelling Allowance, House Rent Allowance and some more. However, some special allowances that are exempt fall under Section 10 (14).
Section 10 (14):
Under special allowance act of Section 10 (14), exemption is granted based on the amount utilised for a specific purpose by the employee. The exemption depends on the following points:
Section 10 (14) (i):
Under Section 10 (14)(i), allowances are exempted to the extent of the amount received as allowance or amount spent on certain duties, whichever is the lower figure.
Allowances covered in this category are:
Usually, it is not required to furnish details of the expenses incurred under this category of allowance unless the expense are disproportionate to the salary or unreasonable in reference to the duty performed by the employee. At most times, it is not required for you to keep a proof of documents and a simple declaration serves the purpose.
Section 10 (14) (ii):
Under this section, allowance granted to employees for working under certain set of conditions while on duty. The amount exempted is either the amount received as allowance or the limit mentioned, whichever is lesser.
The types of allowances in this category and exempt in allowances are listed below:
Hilly areas of HP, UP, J&K and North East - Rs.800
Siachen are of J&K - Rs.7000 per month
Common places above 1000mtr or above - Rs.300
Karnataka, West Bengal, MP, Assam, Orissa, Tamil Nadu, Bihar, UP and Tripura. - Rs. 200
Allowances ranging from Rs.200 to Rs.1300 pm are exempt under the Rule 2BB.
Areas of Nagaland, J&K, HP, UP, AP, Sikkim and Manipur – Rs.2600 pm
Specific areas of West Bengal, North East, Rajasthan, J&K, UP and HP – Rs.1000 pm.
9000 – 15,000ft – Rs.1060 pm
Above 15,000 ft – Rs.1600 pm
Special Individuals Receiving Allowances Exempt:
There are certain individuals who also receive allowances exempt under Section 10: