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Section 10 of the Income Tax Act

Section 10 of the Income Tax Act (Maximising Your Tax Savings)

An Income Tax Return (ITR) is a form to file details of your income and your liability to pay tax for it. You should pay tax based on the tax liability calculated on your income. If the return shows that you have paid excess tax, you receive an income tax refund from the Income Tax Department. These various income sources include your agricultural income too.

Section 10 of the Income Tax Act aims to provide exemptions if you are a salaried professional while paying income tax. This section mainly concentrates on your income sources that are not part of your total income. The Income Tax Act calculates your total revenue by analyzing your total amount of tax liability. The tax rebate of salaried professionals falls under this section of the Income Tax Act of 1961.

The income sources that are not part of your total income include your agriculture income. Section 10 has several sub-sections to provide clarity on your other income sources. Agriculture income comes under section 10(1).

Section 10(1) Exemption of Agriculture Income

According to this section, if you are a taxpayer and earn income from agriculture, you are liable to get tax exemptions. If you enjoy the returns relating to the farmhouse, you can get an exemption from tax based on certain conditions.

The income may be:

  1. Rent or revenue that you receive from agricultural land in India
  2. Basic operations on your land as cultivation, tilling, and sowing
  3. Successive processes for the growth and protection of the product as weeding, cutting, pruning, etc.
  4. Sale of your agricultural yield
  5. Income from farm building that uses agricultural operations

You can claim exemptions to these incomes from your agriculture source under section 10(1) of the Income Tax Act.

What Is the Exemption under Section 10 of Income Tax?

The following are the several exemptions that come under section 10 and sub-sections.

  1. Section 10(1) – Your income through agricultural means in India.
  2. Section 10(2)- Income or any amount you receive through inheritance from a HUF (Hindu undivided family), which includes the family income.
  3. Section 10(2A)-Your profit if you are a partnership with a company.
  4. Section 10 (4) (i) and (ii)-Any interest amount you receive if you are a non-resident of India in person or through your bank account.
  5. Section 10 (4B)-If you are a non-resident of India but an Indian by origin, the interest amount you receive.
  6. Section 10 (5)-If you are an Indian employee, any concession you receive for your travel.
  7. Section 10 (6)-Income of a non-Indian citizen made or received in India.
  8. Section 10 (6A), (6B), (6BB), (6C)-If you own a foreign company, the tax levied on your earnings. 
  9. Section 10 (7)-Government employees, when they go abroad for work, allowances that they receive.
  10. Section 10 (8)-Income you receive under Cooperative Technical Assistance Program by foreign employees working in India.
  11. Section 10 (8A) and (8B)-Earnings of a consultant or the consultant’s staff.
  12. Section 10 (9)-Income of the family members of foreign employees under the Cooperative Technical Assistance Program.
  13. Section 10 (10)-Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government.
  14. Section 10 (10A) and (10AA)-Any commuted amount earned during retirement and the amount made via encashment of leaves during retirement.
  15. Section 10 (10B)-Compensation that you get for relocation from a job.
  16. Section 10 (10BB) and (10BC)-Any remittance you obtain according to the Bhopal Gas Leak Disaster Act 1985 or in the event of any disaster.
  17. Section 10 (10CC) and (10D)-Any amount you receive through taxation, perquisites, and life insurance policy.
  18. Section 10 (11), (12), and (13)-Any amount you receive through Statutory Provident Fund, an authorized or recognized Fund, or via a Superannuation Fund.
  19. Section 10 (14)-Allowance you use for meeting business expenses.

These are the several exemptions that you receive under section 10.

How Do I Claim Section 10D?

Life insurance policies that you take not only help you during your difficult situation but also help with tax benefits. You can claim deductions for your insurance policies under section 10D.

Premiums you pay for your insurance are eligible for deductions under this section.

Tax benefits under Section 10(10D) are available for claims, such as death and maturity benefits, including all earned bonuses against your insurance policy. Any claim you made under life insurance is eligible for a tax exemption under this clause without any maximum limit.

Thus, you can claim your returns under section 10D for the premiums you pay for your insurance policies.

What Are Section 10 Allowances?

Section 10 of the income tax act helps to reduce your tax burden by allowing exemptions that are not part of your total income. The various exemptions and allowances that come under this section are detailed in this article.

Section 10 contains all the exemptions you can opt for under the Income Tax Act. They include gratuity, travel allowance, rent allowance, leave allowance, allowance for children, education allowance exemption, etc. 

How Do I Calculate My Salary after the Section 10 Exemption?

If you claim an exemption under section 10, you can compute the total taxable salary after reducing the allowances exempt under Section 10. The balance salary you receive is taxable as per the Income Tax Slabs. TDS on salary will also get deducted, and you can claim credit for the same while filing your income tax return.

Is LTA under Section 10?

Your Leave Travel Allowance(LTA) comes under Section 10(5). Leave Travel Allowance refers to an amount you receive from your employer for leave proceeding to any place in India either on leave, after retirement, or termination from your service. The Benefit is available to you if you are a resident or non-resident in respect of leave concession for you or your family. The family includes a spouse, children of individual parents, and brothers and sisters dependent upon you. You can claim these deductions under Section 10(5).

Bottomline

Section 10 of the Income Tax Act aims to provide exemptions if you are a salaried professional while paying income tax. This section mainly concentrates on your income sources that are not part of your total income. You can claim exemptions under this section which reduces your tax burden.

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