S. N.
Section
Particulars
Benefits
A.
Allowances
1.
10(13A)
House Rent Allowance (Sec. 10(13A) & Rule 2A)
Least of the following is exempt:
a) Actual HRA Received
b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)
c) Rent paid minus 10% of salary
* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission

Note:
  i.  Fully Taxable, if HRA is received by an an employee who is living in his own house or if he does not pay any rent
 ii. It is mandatory for the employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October 2013].
2.
10(14)
Children Education Allowance
Up to Rs. 100 per month per child up to a maximum of 2 children is exempt
3.
10(14)
Hostel Expenditure Allowance
Up to Rs. 300 per month per child up to a maximum of 2 children is exempt
4.
10(14)
Transport Allowance granted to an employee to meet the expenditure for the purpose of commuting between place of residence and place of duty
Rs. 3,200 per month granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities
5.
Sec. 10(14)
Transport Allowance to an employee working in any transport business to meet his personal expenditure during his duty performed in the the course of running of such transport from one place to another place provided the employee is not in receipt of the daily allowance.
Amount of exemption shall be lower of the following:
a) 70% of such allowance; or
b) Rs. 10,000 per month.
6.
10(14)
Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office
Exempt to the extent of expenditure incurred
7.
10(14)
Any Allowance granted to meet the cost of travel on tour or on transfer
Exempt to the extent of expenditure incurred
8.
10(14)
Daily Allowance to meet the ordinary daily charges incurred by an an employee on account of absence from his normal place of duty
Exempt to the extent of expenditure incurred
9.
10(14)
Helper/Assistant Allowance
Exempt to the extent of expenditure incurred
10.
10(14)
Research Allowance granted for encouraging the academic research and other professional pursuits
Exempt to the extent of expenditure incurred
11.
10(14)
Uniform Allowance
Exempt to the extent of expenditure incurred
12.
10(7)
Foreign allowances or perquisites paid or allowed by Government to its employees (an Indian citizen) posted outside India
Fully Exempt
13.
-
Allowances to Judges of High Court/Supreme Court (Subject to certain conditions)
Fully Exempt.
14.
10(45)
Following allowances and perquisites are given to serving Chairman/Member of UPSC is exempt from tax:
a) Value of rent-free official residence
b) Value of conveyance facilities including transport allowance
c) Sumptuary allowance
d) Leave travel concession
Fully Exempt
15.
-
Allowances paid by the UNO to its employees
Fully Exempt
16.
10(45)
Allowances to Retired Chairman/Members of UPSC (Subject to certain conditions)
Exempt subject to a maximum of Rs.14,000 per month for defraying services of an orderly and for a secretarial assistant on a contract basis.
The value of residential telephone free of cost and the number of free calls to the extent of 1500 per month shall be exempt.
17.
Sec. 10(14)
Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)
Amount exempt from tax varies from Rs. 300 per month to Rs. 7,000 per month.
18.
Sec. 10(14)
Border area allowances, Remote Locality allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations)
Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300 per month.
19.
Sec. 10(14)
Tribal area allowance is given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa
Rs. 200 per month
20.
Sec. 10(14)
Compensatory Field Area Allowance. If this exemption is taken, an employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)
Rs. 2,600 per month
21.
Sec. 10(14)
Compensatory Modified Area Allowance. If this exemption is taken, an employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)
Rs. 1,000 per month
22.
Sec. 10(14)
Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, the employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)
Rs. 3,900 per month
23.
Sec. 10(14)
Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines
Up to Rs. 800 per month
24.
Sec. 10(14)
High Altitude Allowance is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)
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)
25.
Sec. 10(14)
Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations)
Up to Rs. 4,200 per month
26.
Sec. 10(14)
Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations)
Up to Rs. 3,250 per month
B.
Perquisites
1.
17(2)(i)/(ii)
read with
Rule 3(1)
Rent-free unfurnished accommodation provided to Central and State Government employees
License Fees determined in accordance with rules framed by Government for allotment of houses shall be deemed to be the taxable value of perquisites.

C.
Deduction from salary
1.
16(ia)
Standard Deduction
Rs. 50,000 or the amount of salary, whichever is lower
2.
16 (ii)
Entertainment Allowance received by the Government employees (Fully-taxable in case of other employees)
Least of the following is deductible :
a) Rs 5,000
b) 1/5th of salary (excluding any allowance, benefits or other perquisites)
c) Actual entertainment allowance received
3.
16(iii)
Employment Tax/Professional Tax.
Amount actually paid during the year is deductible. However, if professional tax is paid by the employer on behalf of its employee than it is first included in the salary of the employee as a perquisite and then the same amount is allowed as deduction.
D.
Retirement Benefits

a) Leave Encashment
1.
10(10AA)



c) Gratuity
1.
10(10)(i)
Gratuity received by Government Employees (Other than employees of statutory corporations)
Fully Exempt
2.
10(10)(ii)
Death -cum-Retirement Gratuity received by other employees who are covered under the Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions).
Least of the 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 an employee of the seasonal establishment.
** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite
3.
10(10)(iii)
Death -cum-Retirement Gratuity received by other employees who are not covered under the Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions).
Least of the following amount is exempt from tax:
1. Half month’s Average Salary* X Completed years of service
2. Rs. 20,00,000
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

d) Pension
1.
-
Pension received from United Nation Organization by the employee of his family members
Fully Exempt
2.
10(10A)(i)
Commuted Pension received by an employee Central Government, State Government, Local Authority Employees and Statutory Corporation
Fully Exempt
3.
10(10A)(ii)
Commuted Pension received by other employees who also receive gratuity
1/3 of the full value of a commuted pension will be exempt from tax
4.
10(10A)(iii)
Commuted Pension received by other employees who do not receive any gratuity
1/2 of the full value of a commuted pension will be exempt from tax
5.
10(19)
Family Pension received by the family members of Armed Forces
Fully Exempt
6.
57(iia)
Family pension received by family members in any other case
33.33% of Family Pension subject to a maximum of Rs. 15,000 shall be exempt from tax

f) Provident Fund
1.
-
Employee’s Provident Fund
For taxability of contribution made to various employee’s provident fund and interest arising thereon see Note 3.

National Pension System (NPS)
1.
10(12A)/10(12B)
National Pension System
Any payment from the National Pension System Trust to an assessee on the closure of his account or on his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed 60% of the total amount payable to him at the time of such closure or his opting out of the scheme.
Note: Partial withdrawal from the NPS shall be exempt to the the extent of 25% of the amount of contributions made by the employee.
E.
Arrear of Salary and relief under section 89(1)




2.
89
Relief under Section 89
If an individual receives any portion of his salary in arrears or in advance or receives profits in lieu of salary, he can claim relief as per provisions of section 89 read with rule 21A
4.
10(6)(ii)
Salary received by foreign national as an official of an embassy, high commission, legation, consulate or trade representation of a foreign state
Fully Exempt if the corresponding official in that foreign country enjoys a similar exemption
5.
10(6)(vi)
Remuneration received by a non-resident foreign citizen as an the employee of a foreign enterprise for services rendered in India, if:
a) Foreign enterprise is not engaged in any trade or business in India
b) His stay in India does not exceed in aggregate a period of 90 days in such previous year
c) Such remuneration is not liable to deduct from the the income of employer chargeable under this Act
Fully exempt
6.
10(6)(viii)
Salary received by a non-resident foreign national for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year.
Fully exempt
7.
-
Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions).
Fully Exempt
2. Educational Facilities
Taxable only in the hands of specified employees [See note 4]
Facility extended to
Value of perquisite
Provided in the school-owned by the employer
Provided in any other school
Children
Cost of such education in similar school less Rs. 1,000 per month per child (irrespective of numbers of children) less amount recovered from employee
Amount incurred less amount recovered from employee (an exemption of Rs. 1,000 per month per child is allowed)
Deduction under section 80C on employees contribution
Available
Available
Not Available
Available
Interest credited to provident fund
Fully Exempt
Exempt only to the extent rate of interest does not exceed 9.5%
Fully Exempt
Fully Exempt
Payment received at the time of retirement or termination of service
Fully Exempt
Fully Exempt (Subject to certain conditions and circumstances)
Fully Taxable (except employee’s contribution)
Fully Exempt






* Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits) + turnover based commission
Payment from recognized the provident fund shall be exempt in the hands of employees in following circumstances:
a) If an employee has rendered continue service with his employer (including the previous employer, when PF account is transferred to a current employer) for a period of 5 years or more
b) If an employee has been terminated because of certain reasons which are beyond his control (ill-health, discontinuation of business of employer, etc.)
4. Specified Employee
The following employees are deemed as specified employees:
1) A director-employee
2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or more voting power) in the employer-company
3) An employee whose monetary income* under the salary exceeds Rs. 50,000
*Monetary Income means Income chargeable under the salary but excluding perquisite value of all non-monetary perquisites


[As amended by Finance Act, 2020]