Exemption available under section 10(10A) of the Income Tax Act
Exemption available under section 10(10A) of the Income Tax Act
Provisions of section 10(10A) provide exemption towards the commuted value of a pension. Under the present article, we would understand the exemption available under section 10(10A) of the Income Tax Act. However, before understanding the exemption, it is important to understand the term ‘commuted pension’ and ‘uncommuted pension’ which is explained hereunder:
Simply putting up, the pension is the amount received by the employee after retirement. Based on the type of payment, the pension can be divided into the following two parts-
1. Commuted pension – lump sum payment received, in lieu of the periodic pension; and
2. Uncommuted pension – periodic pension received (monthly, quarterly or annually).
The pension so received would be taxable under the head ‘Salary’. Further, in case the family pension is received (after the death of the employee) by the legal heir, the same would be taxable under the head ‘Income from other sources’.
It is important to note here that the uncommuted value of pension is fully taxable for all the types of employees under the Income Tax. However, exemption towards a commuted pension is available under section 10(10A) of the Income Tax Act.
Exemption available under section 10(10A) of the Income Tax Act–
The commuted pension received is exempted under section 10(10A) in the following manner-
1. The commuted value of pension received by the government employees (listed below) are fully exempted under section 10(10A)–
- Employees of the central government.
- Employees of state government.
- Employees of the local authority.
- Employees of a statutory corporation.
2. The commuted value of pension received by any other employees would be exempted in the following manner-
|
Particulars |
Amount of exemption |
|
Cases, wherein, the employees receive any gratuity. |
The commuted value of 1/3rd of the pension which the employee is normally entitled to receive. |
|
In any other case. |
The commuted value of 1/2 of the pension which the employee is normally entitled to receive. |
3. The commuted pension received from the pension funds [referred under section 10(23AAB)] set up by the Life Insurance Corporation or any other insurer are fully exempt.
Table – Articles on Section 10 Exemptions
|
Sr. No. |
Particulars |
|
1 |
Section 10(1)– Exemption to Agricultural Income |
|
2 |
Section 10(2) Exemption to amount received by co-parcener from HUF |
|
3 |
Section 10(2A) Exemption towards share of income from firm/LLP |
|
4 |
Exemptions towards interest to non-residents | Section 10(4) & 10(4B) |
|
5 |
Exemption on Tax paid by Govt. or Indian concern on certain income of a foreign company |
|
6 |
Section 10(7) Perquisites/allowances exemption to Govt. employees serving outside India |
|
7 |
Exemption- Section 10(8A) & section 10(8B) of Income Tax Act |
|
8 |
Exemption towards commuted value of pension Section 10(10A) |
|
9 |
Exemption towards retrenchment compensation received by workman Section 10(10B) |
|
10 |
Section 10(10BC) Exemption towards compensation received on account of any disaster |
|
11 |
Section 10(10C) Exemption of amount received on voluntary retirement |
|
12 |
Exemption towards tax paid by employer on non-monetary perquisites: Section 10(10CC) |
|
13 |
Section 10(10D) Exemption towards amount received under a Life Insurance Policy |
|
14 |
Exemption for amount received from Statutory & Recognized PF |
|
15 |
Exemption for payment from approved superannuation fund Section 10(13) |
|
16 |
Income Tax Exemption on prescribed allowances/ benefits | Section 10(14) |
|
17 |
Section 10(15) Exemption- Interest on Bonds, Debentures, Securities |
|
18 |
Scholarship exemption | Section 10(16) | Income Tax Act 1961 |
|
19 |
Exemption towards income for administration of Charitable or Religious Institution |
|
20 |
Section 10(32) Exemption | Income of minor clubbed with parent |
|
21 |
Exemption for dividend income received from Indian Company | Section 10(34) |
|
22 |
Section 10(34A) Exemption towards income received by a shareholder on buy back of shares |
|
23 |
Section 10(35) Exemption towards income received from units |
|
24 |
Section 10(37) Exemption towards Capital Gain arising on Compulsory Acquisition of Urban Agricultural Land |