{"id":14000,"date":"2026-05-27T07:34:23","date_gmt":"2026-05-27T07:34:23","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/section-10-income-tax\/"},"modified":"2026-05-27T07:34:23","modified_gmt":"2026-05-27T07:34:23","slug":"section-10-income-tax","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-10-income-tax\/","title":{"rendered":"Section 10: Tax Exemptions Under the Income Tax Act"},"content":{"rendered":"<h1 id=\"section-10-a-practical-guide-for-taxpayers\">Section 10: A Practical Guide for <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Tax<\/a>payers<\/h1>\n<p>Section 10 of the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax-act\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax Act<\/a> lists various incomes that are fully exempt from tax. It covers many common exemptions used by salaried individuals, NRIs, and others. Indian taxpayers should know Section 10 to plan tax better.<\/p>\n<p>This guide explains the main Section 10 exemptions.<\/p>\n<h2 id=\"what-is-section-10\">What Is Section 10?<\/h2>\n<p>Section 10 lists incomes that are:<\/p>\n<ul>\n<li>Exempt from <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">income tax<\/a><\/li>\n<li>Not added to taxable income<\/li>\n<li>Available under specific conditions<\/li>\n<\/ul>\n<p>It is one of the most-used tax planning tools.<\/p>\n<h2 id=\"why-section-10-matters\">Why Section 10 Matters<\/h2>\n<p>Section 10 matters for three reasons:<\/p>\n<ol>\n<li>It reduces taxable income<\/li>\n<li>It supports common tax planning<\/li>\n<li>It covers many income types<\/li>\n<\/ol>\n<p>A clean use of Section 10 saves real tax.<\/p>\n<h2 id=\"common-sub-sections-of-section-10\">Common Sub-Sections of Section 10<\/h2>\n<p>The most-used exemptions include:<\/p>\n<h3 id=\"section-10-10\">Section 10(10)<\/h3>\n<p>Gratuity exemption.<\/p>\n<h3 id=\"section-10-10a\">Section 10(10A)<\/h3>\n<p>Commuted pension.<\/p>\n<h3 id=\"section-10-10aa\">Section 10(10AA)<\/h3>\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/leave-encashment\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Leave encashment<\/a>.<\/p>\n<h3 id=\"section-10-10b\">Section 10(10B)<\/h3>\n<p>Retrenchment compensation.<\/p>\n<h3 id=\"section-10-10c\">Section 10(10C)<\/h3>\n<p>Voluntary retirement.<\/p>\n<h3 id=\"section-10-10d\"><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/section-1010d\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Section 10(10D)<\/a><\/h3>\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/life-insurance\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Life insurance<\/a> proceeds.<\/p>\n<h3 id=\"section-10-13a\">Section 10(13A)<\/h3>\n<p>House Rent Allowance (HRA).<\/p>\n<h3 id=\"section-10-14\">Section 10(14)<\/h3>\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/special-allowance\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Special allowance<\/a>s like uniform, travel.<\/p>\n<h3 id=\"section-10-15\">Section 10(15)<\/h3>\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax-free-bonds\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Tax-free bonds<\/a> interest.<\/p>\n<h3 id=\"section-10-23c\">Section 10(23C)<\/h3>\n<p>Educational institutions and trusts.<\/p>\n<h3 id=\"section-10-34\">Section 10(34)<\/h3>\n<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/dividend\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Dividend<\/a>s from Indian companies (rules changed after 2020).<\/p>\n<h3 id=\"section-10-38\">Section 10(38)<\/h3>\n<p>Long-term <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gain\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">capital gain<\/a>s on <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/equity\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">equity<\/a> (rules changed after 2018).<\/p>\n<p>Each sub-section has its own rules.<\/p>\n<h2 id=\"section-10-10-gratuity\">Section 10(10): Gratuity<\/h2>\n<p>For salaried employees:<\/p>\n<ul>\n<li>Exempt up to &#x20B9;20 lakh<\/li>\n<li>Based on years of service and last drawn salary<\/li>\n<\/ul>\n<p>A major retirement benefit.<\/p>\n<h2 id=\"section-10-10aa-leave-encashment\">Section 10(10AA): Leave Encashment<\/h2>\n<p>For non-government employees:<\/p>\n<ul>\n<li>Exempt up to &#x20B9;25 lakh (revised in recent budgets)<\/li>\n<li>Based on years of service<\/li>\n<\/ul>\n<p>Government employees get full exemption.<\/p>\n<h2 id=\"section-10-10d-life-insurance\">Section 10(10D): Life Insurance<\/h2>\n<p>Sum received from life insurance:<\/p>\n<ul>\n<li>Generally exempt<\/li>\n<li>Subject to conditions (<a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/premium\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">premium<\/a> rules, <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/ulip\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>ULIP<\/a> rules)<\/li>\n<li>Higher-premium policies may face tax<\/li>\n<\/ul>\n<p>Check the latest rules.<\/p>\n<h2 id=\"section-10-13a-hra\">Section 10(13A): HRA<\/h2>\n<p>Salaried employees receiving HRA can claim exemption:<\/p>\n<ul>\n<li>Based on rent paid<\/li>\n<li>City of residence (metro vs non-metro)<\/li>\n<li>Basic salary<\/li>\n<\/ul>\n<p>A common deduction for renters.<\/p>\n<h2 id=\"section-10-14-special-allowances\">Section 10(14): Special Allowances<\/h2>\n<p>Allowances exempt under conditions:<\/p>\n<ul>\n<li>Conveyance for office travel<\/li>\n<li>Helper allowance<\/li>\n<li>Uniform allowance<\/li>\n<li>Travel allowance<\/li>\n<\/ul>\n<p>Each has specific limits.<\/p>\n<h2 id=\"section-10-23c-trusts-and-institutions\">Section 10(23C): Trusts and Institutions<\/h2>\n<p>Educational institutions, hospitals, charities:<\/p>\n<ul>\n<li>Get exemption under strict rules<\/li>\n<li>Must follow Section 11 or 10(23C)<\/li>\n<li>Required to be registered<\/li>\n<\/ul>\n<p>Trust compliance is essential.<\/p>\n<h2 id=\"section-10-34-dividends\">Section 10(34): Dividends<\/h2>\n<p>Until FY 2019-20:<\/p>\n<ul>\n<li>Dividends from Indian companies were tax-free<\/li>\n<li>DDT was paid by the company<\/li>\n<\/ul>\n<p>From FY 2020-21:<\/p>\n<ul>\n<li>Dividends are taxable in the shareholder&#x2019;s hands<\/li>\n<li>Section 10(34) limited to specific cases<\/li>\n<\/ul>\n<p>This was a major change.<\/p>\n<h2 id=\"section-10-38-equity-ltcg\">Section 10(38): Equity LTCG<\/h2>\n<p>Until FY 2017-18:<\/p>\n<ul>\n<li>Long-term capital gains on equity were tax-free<\/li>\n<\/ul>\n<p>From FY 2018-19:<\/p>\n<ul>\n<li>LTCG above &#x20B9;1 lakh taxed at 10 percent<\/li>\n<li>Section 10(38) limited<\/li>\n<\/ul>\n<p>Confirm current rules.<\/p>\n<h2 id=\"benefits\">Benefits<\/h2>\n<p>Section 10 offers:<\/p>\n<ol>\n<li>Multiple exemption opportunities<\/li>\n<li>Better tax planning<\/li>\n<li>Saves real tax<\/li>\n<li>Supports common life events<\/li>\n<\/ol>\n<p>These benefits suit most taxpayers.<\/p>\n<h2 id=\"how-to-claim-section-10\">How to Claim Section 10<\/h2>\n<p>A common method:<\/p>\n<ol>\n<li>Identify eligible exempt income<\/li>\n<li>Maintain proper records<\/li>\n<li>Report exempt income in ITR<\/li>\n<li>Use the correct schedule<\/li>\n<li>File on time<\/li>\n<\/ol>\n<p>The exempt income may still need disclosure.<\/p>\n<h2 id=\"documents-needed\">Documents Needed<\/h2>\n<p>Keep these handy:<\/p>\n<ul>\n<li>Salary slips with allowance breakups<\/li>\n<li>Rent receipts and agreement (for HRA)<\/li>\n<li>Gratuity calculation<\/li>\n<li>Insurance maturity records<\/li>\n<li>Trust registration documents<\/li>\n<\/ul>\n<p>Records vary by exemption.<\/p>\n<h2 id=\"common-mistakes\">Common Mistakes<\/h2>\n<p>Taxpayers often:<\/p>\n<ul>\n<li>Skip claiming HRA exemption<\/li>\n<li>Miss reporting exempt income<\/li>\n<li>Use outdated rules<\/li>\n<li>Confuse Section 10 with Section 80<\/li>\n<\/ul>\n<p>A clean check avoids these errors.<\/p>\n<h2 id=\"tips-for-better-use\">Tips for Better Use<\/h2>\n<p>A few habits help:<\/p>\n<ol>\n<li>Plan exemptions before year-end<\/li>\n<li>Submit proofs to employer<\/li>\n<li>Keep records yearly<\/li>\n<li>Track rule changes<\/li>\n<li>Use both Section 10 and 80 for full savings<\/li>\n<\/ol>\n<h2 id=\"section-10-and-new-tax-regime\">Section 10 and New Tax Regime<\/h2>\n<p>Under the new tax regime:<\/p>\n<ul>\n<li>Many Section 10 exemptions are NOT available (like HRA)<\/li>\n<li>Some still apply (gratuity, certain allowances)<\/li>\n<li>Plan based on overall impact<\/li>\n<\/ul>\n<p>Compare both regimes.<\/p>\n<h2 id=\"key-takeaways\">Key Takeaways<\/h2>\n<ul>\n<li>Section 10 lists fully tax-exempt incomes<\/li>\n<li>Covers HRA, gratuity, allowances, and more<\/li>\n<li>Most are subject to specific conditions<\/li>\n<li>Many limited under new tax regime<\/li>\n<li>Indian taxpayers should use Section 10 strategically<\/li>\n<\/ul>\n<p>Section 10 is one of the most useful tax tools. Know your exemptions, maintain proofs, and let smart planning save real tax every year.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 10: A Practical Guide for Taxpayers Section 10 of the Income Tax Act lists various incomes that are fully exempt from tax. It covers many common exemptions used by salaried individuals, NRIs, and others. Indian taxpayers should know Section 10 to plan tax better. This guide explains the main Section 10 exemptions. What Is [&#x2026;]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14000","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Section 10: A Practical Guide for Taxpayers Section 10 of the Income Tax Act lists various incomes that are fully exempt from tax. It covers many common exemptions used by salaried individuals, NRIs, and others. Indian taxpayers should know Section 10 to plan tax better. This guide explains the main Section 10 exemptions. What Is&hellip;","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14000","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14000\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}