Section 10(17A) of the Income Tax Act, 1961 is a provision that provides tax exemption for a specific type of allowance granted to Members of Parliament (MPs). The section provides relief from tax on the Special Allowance paid to MPs for carrying out their parliamentary duties.
In this article, we will discuss the provisions of Section 10(17A), its scope and applicability, and the implications of the exemption for taxpayers and MPs.
What is Section 10(17A)?
Section 10(17A) of the Income Tax Act, 1961 is a provision that exempts from tax any Special Allowance granted to MPs for carrying out their parliamentary duties. The provision was inserted by the Finance Act, 2018, and is applicable from the assessment year 2019-20 onwards.
The Special Allowance is a separate allowance granted to MPs over and above their regular salary and other allowances. It is meant to cover the expenses incurred by MPs in the discharge of their duties as elected representatives of the people.
Scope and Applicability of Section 10(17A)
The exemption provided under Section 10(17A) is applicable only to the Special Allowance paid to MPs. The regular salary and other allowances received by MPs are taxable as per the provisions of the Income Tax Act.
The exemption is available to all MPs, including members of the Lok Sabha, Rajya Sabha, and state legislative assemblies. However, the exemption is not available to MPs who have opted for the new tax regime introduced by the Finance Act, 2020.
Implications of the Exemption
The exemption provided under Section 10(17A) is significant for MPs as it reduces their tax liability. The Special Allowance paid to MPs can be substantial, and if it were to be taxed, it would result in a significant tax outgo for MPs.
For taxpayers, the exemption may not have a direct impact, as it is specific to MPs. However, it is essential to understand the provisions of the Income Tax Act, as it provides insights into the different types of exemptions and deductions available under the Act.
In conclusion
Section 10(17A) of the Income Tax Act, 1961 provides an exemption from tax for the Special Allowance granted to MPs for carrying out their parliamentary duties. The exemption is a significant relief for MPs, as it reduces their tax liability. It is important for taxpayers to understand the provisions of the Income Tax Act, as it provides insights into the various types of exemptions and deductions available under the Act.
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Frequently Asked Questions (FAQs)
Q. What is Section 10(17A) of the Income Tax Act?
Section 10(17A) of the Income Tax Act is a provision that provides an exemption from tax for the Special Allowance paid to Members of Parliament (MPs) for carrying out their parliamentary duties.
Q. Who is eligible for the exemption under Section 10(17A)?
The exemption is available to all MPs, including members of the Lok Sabha, Rajya Sabha, and state legislative assemblies. However, the exemption is not available to MPs who have opted for the new tax regime introduced by the Finance Act, 2020.
Q. What is the Special Allowance paid to MPs?
The Special Allowance is a separate allowance granted to MPs over and above their regular salary and other allowances. It is meant to cover the expenses incurred by MPs in the discharge of their duties as elected representatives of the people.
Q. Is the entire Special Allowance exempt under Section 10(17A)?
Yes, the entire Special Allowance paid to MPs is exempt from tax under Section 10(17A) of the Income Tax Act.
Q. What is the impact of the exemption on the tax liability of MPs?
The exemption provided under Section 10(17A) is significant for MPs as it reduces their tax liability. The Special Allowance paid to MPs can be substantial, and if it were to be taxed, it would result in a significant tax outgo for MPs.
Q. Is the exemption under Section 10(17A) applicable to all allowances received by MPs?
No, the exemption under Section 10(17A) is applicable only to the Special Allowance paid to MPs. The regular salary and other allowances received by MPs are taxable as per the provisions of the Income Tax Act.
Q. Is the exemption under Section 10(17A) applicable to former MPs?
No, the exemption under Section 10(17A) is applicable only to current MPs. Former MPs are not eligible for the exemption.
Q. When did the provisions of Section 10(17A) become applicable?
The provisions of Section 10(17A) became applicable from the assessment year 2019-20 onwards. The provision was inserted by the Finance Act, 2018.
Q. Is it mandatory for MPs to claim the exemption under Section 10(17A)?
No, it is not mandatory for MPs to claim the exemption under Section 10(17A). MPs can choose to include the Special Allowance in their total income and pay tax on it.
Q. Can MPs claim other deductions and exemptions under the Income Tax Act?
Yes, MPs can claim other deductions and exemptions under the Income Tax Act, subject to the conditions and limits prescribed under the Act. However, the exemption under Section 10(17A) is specific to the Special Allowance paid to MPs for carrying out their parliamentary duties.
