Section 10(7) of the Income Tax Act provides an exemption to government employees for certain allowances granted to them as part of their employment. In this article, we will discuss the various aspects of Section 10(7) and how it applies to government employees.
What is Section 10(7)?
Section 10(7) of the Income Tax Act states that any special allowance, whether or not in the nature of a perquisite, granted to an employee of the Central or State Government to meet the expenses incurred in the performance of his official duties, shall be exempt from income tax.
This means that if a government employee receives any special allowance specifically to meet the expenses incurred while performing official duties, then such allowance will be exempt from income tax.
What are the allowances covered under Section 10(7)?
The following allowances are covered under Section 10(7):
- Traveling Allowance: Any allowance granted to an employee to meet the cost of travel on tour or on transfer.
- Daily Allowance: Any allowance granted to an employee to meet his daily expenses on account of absence from his normal place of duty.
- Conveyance Allowance: Any allowance granted to an employee to meet the expenditure on conveyance in performance of duties of an office.
- Helper Allowance: Any allowance granted to an employee to meet the expenditure incurred on a helper engaged for the performance of official duties.
- Research Allowance: Any allowance granted to an employee engaged in research work to meet the expenses incurred for such work.
It is important to note that the exemption is applicable only if these allowances are granted to meet the expenses incurred in the performance of official duties.
Who is eligible for the exemption?
The exemption under Section 10(7) is applicable only to employees of the Central or State Government. It does not apply to employees of local authorities, statutory corporations or companies.
In addition, the exemption is applicable only if the allowance is granted specifically to meet the expenses incurred in the performance of official duties.
How much exemption can be claimed under Section 10(7)?
The exemption under Section 10(7) is limited to the amount of allowance received by the employee for meeting the expenses incurred in the performance of official duties. If the allowance exceeds the expenses incurred, then the excess amount will be taxable.
Conclusion
Section 10(7) of the Income Tax Act provides a valuable exemption to government employees for certain allowances granted to them to meet the expenses incurred in the performance of official duties. It is important for government employees to understand the various allowances covered under this section and the conditions for claiming the exemption. If you are a government employee, make sure to consult a tax expert to ensure that you are claiming the exemption correctly.
Read more useful content:
- section 234e of income tax act
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Frequently Asked Questions (FAQs)
Q. What is Section 10(7) of the Income Tax Act?
Section 10(7) of the Income Tax Act provides an exemption to government employees for certain allowances granted to them to meet the expenses incurred in the performance of official duties.
Q. Which allowances are covered under Section 10(7)?
The following allowances are covered under Section 10(7):
- Traveling Allowance
- Daily Allowance
- Conveyance Allowance
- Helper Allowance
- Research Allowance
Q. Who is eligible for the exemption under Section 10(7)?
The exemption under Section 10(7) is applicable only to employees of the Central or State Government. It does not apply to employees of local authorities, statutory corporations or companies.
Q. What are the conditions for claiming the exemption under Section 10(7)?
The exemption under Section 10(7) is applicable only if the allowance is granted specifically to meet the expenses incurred in the performance of official duties.
Q. How much exemption can be claimed under Section 10(7)?
The exemption under Section 10(7) is limited to the amount of allowance received by the employee for meeting the expenses incurred in the performance of official duties. If the allowance exceeds the expenses incurred, then the excess amount will be taxable.
Q. Is there any limit to the amount of exemption that can be claimed under Section 10(7)?
There is no specific limit to the amount of exemption that can be claimed under Section 10(7). However, the exemption is limited to the amount of allowance received by the employee for meeting the expenses incurred in the performance of official duties.
Q. Is it necessary to submit proof of expenses incurred to claim the exemption under Section 10(7)?
Yes, it is necessary to submit proof of expenses incurred to claim the exemption under Section 10(7). The employee should maintain proper records of the expenses incurred, such as bills, receipts, etc.
Q. Can the exemption under Section 10(7) be claimed along with other exemptions?
Yes, the exemption under Section 10(7) can be claimed along with other exemptions, subject to the conditions specified for each exemption.
Q. Can the exemption under Section 10(7) be claimed for allowances received after retirement?
No, the exemption under Section 10(7) is applicable only for allowances received by an employee during the period of his employment. It cannot be claimed for allowances received after retirement.
Q. Is the exemption under Section 10(7) applicable for employees of private companies?
No, the exemption under Section 10(7) is applicable only to employees of the Central or State Government. It does not apply to employees of private companies or other organizations.
