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Section 10 Income Tax | What is Section 10 of the Income Tax Act | YES BANK

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As per the Income Tax Act of 1961, all individuals with an annual income of more than ₹2.5 lakhs are obligated to pay income tax to the government. The minimum limit for senior citizens above the age of 60 is ₹3 lakhs. While the Act was instated with the goal of administrating, collecting, and recovering income tax from the general public, it also has some provisions that enable tax savings. Section 10 is one of these provisions.

What is Section 10 in the Income Tax Act?

As per Section 10 in the Income Tax Act of 1961, a salaried individual is exempt from taxes on various types of incomes. This can range from an allowance for living in the border area for the armed forces to a conveyance allowance offered to a private company employee to cover their day to day commutes. Here is a list of all exemptions under Sec 10:

  • Agricultural income for self-employed people

  • Compensation from voluntary retirement

  • Benefits from a life insurance policy

  • House rent allowance

  • Provident fund withdrawals

  • Income earned as a member of a Hindu undivided family

  • Compensation received by the government in case of a natural disaster

There are also some other type of allowances that are exempted from tax under Section 10. These include:

  • Daily allowance for expenses incurred during an official trip or while transferring to a new job location.

  • Helper allowance for hired help for office duties.

  • Travel allowance for travel for official reasons.

  • Uniform allowance for the maintenance of official uniform.

  • Research allowance for expenses incurred during research, training, etc. in educational institutes.

  • Climatic allowance for living and working in high altitude areas. This includes areas in Himachal Pradesh, North East, Jammu and Kashmir, and Ladakh.

  • Tribal area allowance for working in pre-classified tribal areas in Karnataka, Madhya Pradesh, West Bengal, Tamil Nadu, Orissa, Tripura, and Uttar Pradesh.

  • Field allowance for working in areas of volatility in Nagaland, Himachal Pradesh, Andhra Pradesh, Manipur, Jammu and Kashmir, Uttar Pradesh, etc.

  • Border allowance for the armed forces working in the border area.

  • Island duty allowance for the armed forces for serving in the Lakshadweep Islands and the Andaman and Nicobar Islands.

  • Counterinsurgency allowance for the armed forces employed in counterinsurgency areas.

  • Underground mine workers allowance.

  • Modified field allowance.

  • Transport allowance for physically disabled working individuals.

  • Children education fund allowance and hostel allowance to cover education expenses of up to two children.

Section 10 tax exemption with Yes Bank Insurance

As per the components of Section 10 of the Income Tax Act of 1961, any funds received or earned through a life insurance policy are entirely exempt from income tax. This includes the death benefit given to the nominee, policy boosters or rewards earned on the plan, or any bonus received during the term.

Combining these tax benefits along with comprehensive features of life insurance, Yes Bank offers protection for life with a life insurance plan. The plan suits all individuals irrespective of their life stage (single, married with no children, married with dependents, nearing retirement, and retirees). The plan is also focused on a number of factors such as retirement savings, child security, health protection, wealth creation, and more.

Conclusion

While the Income Tax Act mandates all individuals to pay tax to the government of India every financial year, Section 10 offers respite in the name of exemptions. Missing out on crucial components and letting hard-earned money be wasted in tax can cause frustration, stress, and hamper personal and financial growth. Therefore, it is advisable to be aware of all the provisions of this Section in order to avail its full benefits.

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