Section 10 of the Income Tax Act, 1961 allows a variety of tax exemptions to the salaried individuals. These exemptions are offered on incomes generated from gratuity, travel allowance, children’s education allowance, and more.
Here are a lot of different sub-sections of Section 10 which you should learn about:
- Section 10 (10D)
Section 10 (10D) of the Income Tax Act allows income tax benefits on any returns generated from life insurance policies. However, benefits received from a ‘Keyman Insurance Policy’ are not included in the Section; hence, these will not offer any tax exemption. Also, remember that any policy bought after April 1, 2012, will offer the exemption only if the total premium paid in not more than 10% of the sum assured. Since 2013, it has been raised to 15% for individuals suffering from any disability or diseases as specified under Sections 80U and 80DDB. The premium percentage for policies bought after April 1, 2003, but before March 31, 2012, is 20%.
- Section 10 (10C)
Under this section, any compensation received by a salaried employee on voluntary retirement is tax exempted. However, it comes with an exemption limit of INR 5 lakh. This tax benefit is not offered to directors of a co-operative society or any company. It is also important to remember that the employees of private sector companies can receive the benefit only if their age is 40 or more, or if they have completed ten years in a company.
- Section 10 (11)
The income from any provident fund that is offered by the Central Government is tax exempted under this section. It also offers the same tax benefits for income generated by provident funds that meet the mandates set by the Provident Funds Act, 1925.
- Section 10 (14)
This section offers tax exemptions on the allowance granted to government employees for specific purposes. Section 10 (14) is divided into two sub-sections: (i) and (ii); Section 10 (14) (i) offers tax exemption on daily allowance, travel allowance, research allowance, and uniform allowance. The tax exemptions under Section 10 (14) (ii) is offered on special allowances like allowance paid to government employees posted in hilly areas, tribal regions, and remote areas of the country. The tax benefit is also offered on children’s education allowance, armed forces allowance, travel allowance for the disabled, and allowance given to the underground mine workers.
- Section 10 (15)
This section comes with multiple sub-sections, which offer tax exemptions on interest earned from different sources. These include bonds, deposits, securities, certificates, and more. Section 10 (15) has many exceptions and regulations that need to be met while an individual is claiming for tax exemptions.
Now that you understand the various tax exemptions offered by Section 10 of the Income Tax Act, 1961, make sure to claim the benefits accordingly. Do not miss any opportunity to save taxes on your hard-earned money.