S.No. |
Particulars |
Section |
Threshold Limits (for exemptions and others) |
B. |
Under the head Salaries |
1. |
Entertainment Allowance (Exempt in case of Government employee only) |
16(ii) |
Least of the following is exempt from tax: (a) Rs 5,000 (b) 1/5th of salary (excluding any allowance, benefit or perquisite)(c) Actual entertainment allowance received |
2. |
Encashment of unutilized earned leave at the time of retirement by an employee (other than Government employee)(Subject to certain conditions) |
10(10AA) |
FLeast of the following shall be exempt from tax: (a) Amount actually received (b) Unutilized earned leave** X Average monthly salary (c) 10 months Average Salary** (d) Rs. 3,00,000*While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer **Average salary = Average Salary*** of last 10 months immediately preceding the retirement **Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission |
3. |
Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947 (Subject to certain conditions). |
10(10B) |
Least of the following shall be exempt from tax: (a) an amount calculated as per 10(10B)of the Industrial Disputes Act, 1947; (b) Rs. 5,00,000; or (c) Amount actually received. |
4. |
Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). |
10(10) |
Least of following amount is exempt from tax: (1) (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months. (2). Rs. 20,00,000 (3). Gratuity actually received. *7 days in case of employee of seasonal establishment. ** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite |
5. |
Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act,1972 (other than Government employee)(Subject to certain conditions). |
10(10) |
(1) 1/2 X Average Salary* X Completed years of service (2) Rs. 10,00,000 (3) Gratuity actually received. *Average salary = Average Salary of last 10 months immediately preceding the month of retirement **Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission |
6. |
Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions |
10(10C) |
Least of the following is exempt from tax: 1) Actual amount received as per the guidelines i.e. least of the following (a) 3 months salary for each completed year of services (b) Salary at the time of retirement X No. of months of services left for retirement; or 2) Rs. 5,00,000 |
7. |
Children Education Allowance |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 100 per month per child up to a maximum of 2 children. |
8. |
Hostel Expenditure Allowance |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 300 per month per child up to a maximum of 2 children. |
9. |
Transport Allowance granted to an employee to meet expenditure on commuting between place of residence and place of duty |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 3,200 per month for blind and handicapped employees |
10. |
Transport Allowance to an employee working in anytransport 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. |
Sec. 10(14) read with Rule 2BB |
Amount of exemption shall be lower of following: a) 70% of such allowance; or b) Rs. 10,000 per month. |
11. |
Allowances to Retired Chairman/Members of UPSC |
10(45) |
Up to Rs.14,000 per month for defraying the service of an orderly and for meeting expenses incurred to wards secretarial assistance an contract basis. |
12. |
Special compensatory Allowance (Hilly Areas) |
Sec. 10(14) read with Rule 2BB |
Amount exempt from tax varies from Rs. 300 to Rs. 7,000 per month. |
13. |
Border area, Remote Locality or Disturbed Area or Difficult Area Allowance (Subject to certain conditions and locations) |
Sec. 10(14) read with Rule 2BB |
Amount exempt from tax varies from Rs. 200 to Rs.1,300 per month. |
14. |
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, |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 200 per month |
15. |
Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 2,600 per month |
16. |
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) |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 1,000 per month |
17. |
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 andlocations) |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 3,900 per month |
18. |
Underground Allowance to employees working in uncongenial, unnatural climate in underground mines (Subject to certain conditions) |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 800 per month |
19. |
Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations) |
Sec. 10(14) read with Rule 2BB |
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) |
20. |
Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations) |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 4,200 per month |
21. |
Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations) |
Sec. 10(14) read with Rule 2BB |
Up to Rs. 3,250 per month |
22. |
Standard Deduction to salaried taxpayers |
16(ia) |
Up to Rs. 40,000 |
23. |
Tax on contribution to an approved superannuation fund by the employer in respect of the employee |
Rule 3 |
To the extent it exceeds Rs.1,50,000 per year (not taxable if employer's contribution is Rs. 1 lakh or less per year) |
24. |
Expense incurred by employer on providing educational facility to the children of the employee shall be exempt |
Rule 3 |
Up to Rs.1,000 per month per child |
25. |
Interest on loan received from employer at concessional rate of interest couldn’t be taxed as perquisite in the hands of the employee |
Rule 3 |
Up to Rs.1,000 per month per child If aggregate amount of such loan during the relevant previous year does not exceed Rs.20,000 |
26. |
Free meal provided to employees during office hours by the employer couldn’t be taxed as perquisite in the hands of the employees |
Rule 3 |
If cost of such meal does not exceed Rs.50 per meal |
27. |
Value of any gift received by the employee or by member of his household from employer is exempt in the hands of the employee |
Rule 3 |
Up to the extent of Rs.5,000 if received in kind |