{"id":14022,"date":"2026-05-27T07:36:28","date_gmt":"2026-05-27T07:36:28","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/section-1014\/"},"modified":"2026-05-27T07:36:28","modified_gmt":"2026-05-27T07:36:28","slug":"section-1014","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-1014\/","title":{"rendered":"Section 10(14): Tax-Exempt Allowances for Employees"},"content":{"rendered":"

Section 10(14) of the Income Tax Act<\/a> covers tax<\/a> exemptions for specific allowances paid to employees. Many salaried employees receive allowances as part of their compensation package, and knowing which ones are tax-free can reduce your annual tax burden. This section is particularly useful for those in field roles, government jobs, or positions involving specialised expenses<\/a>.<\/p>\n

What is Section 10(14)?<\/h2>\n

Section 10(14) exempts certain allowances paid by employers to employees from income tax<\/a>, provided the allowance is given for a specific purpose. The section divides allowances into two categories:<\/p>\n

**Section 10(14)(i):** Allowances given to cover expense<\/a>s incurred entirely in the performance of official duties. These are exempt only to the extent the amount is actually spent on the specified purpose.<\/p>\n

**Section 10(14)(ii):** Allowances given to compensate for personal living or location-related costs. These are exempt up to fixed limits specified in Rule 2BB of the Income Tax Rules, regardless of actual spending.<\/p>\n

Key Allowances Under Section 10(14)(i)<\/h2>\n

These are fully exempt only if the amount is actually spent for the purpose:<\/p>\n

– **Travelling Allowance:** Covers actual travel costs for official duty.
\n– **Daily Allowance:** For daily living expenses during official tours or postings away from headquarters.
\n– **Conveyance Allowance<\/a>:** Travel costs between office and work locations.
\n– **Research Allowance:** Expenses for academic or research activities.
\n– **Uniform Allowance:** Costs of purchasing and maintaining work uniforms.
\n– **Helper Allowance:** Hiring a helper for official duties.<\/p>\n

Any unspent portion of these allowances is added to your taxable income.<\/p>\n

Key Allowances Under Section 10(14)(ii)<\/h2>\n

These are exempt up to fixed limits, regardless of actual spending:<\/p>\n

– **Children’s Education Allowance:** Up to Rs. 100 per month per child, for a maximum of two children. That is Rs. 1,200 per year per child.
\n– **Children’s Hostel Allowance:** Up to Rs. 300 per month per child, for a maximum of two children. That is Rs. 3,600 per year per child.
\n– **Transport Allowance for Disabled Employees:** Up to Rs. 3,200 per month for employees who are blind, deaf-mute, or orthopedically disabled.
\n– **Special Compensatory Allowances:** For employees posted in border areas, high-altitude locations, or remote areas. Limits vary by location and are specified in Rule 2BB.
\n– **Tribal Area Allowance:** Exempt up to Rs. 200 per month for employees in specified tribal areas.
\n– **Underground Allowance:** For employees working in underground mines, exempt up to Rs. 800 per month.
\n– **Island Duty Allowance:** For central government employees in the Andaman and Nicobar Islands or Lakshadweep, exempt up to Rs. 3,250 per month.<\/p>\n

The Change in Transport Allowance<\/h2>\n

Until FY 2017-18, a general transport allowance up to Rs. 1,600 per month (or Rs. 3,200 for disabled employees) was exempt for all salaried employees to cover commuting costs. From FY 2018-19, this general exemption was removed for most employees, replaced by the Standard Deduction<\/a> of Rs. 40,000 (later raised to Rs. 50,000). The higher transport allowance for disabled employees continues to apply.<\/p>\n

What Section 10(14) Does Not Cover<\/h2>\n

Section 10(14) does not cover House Rent Allowance, which falls under Section 10(13A). Medical allowances and most other allowances not specifically listed in Rule 2BB are fully taxable.<\/p>\n

Practical Example<\/h2>\n

Sunita works as a sales representative. Her employer pays her Rs. 8,000 per month as a conveyance allowance. She spends Rs. 6,500 per month on official travel. Under Section 10(14)(i), Rs. 6,500 is exempt. The unspent Rs. 1,500 per month is added to her taxable income. That amounts to Rs. 18,000 of additional taxable income per year if the pattern continues throughout the year.<\/p>\n

Key Takeaways<\/h2>\n

– Section 10(14) exempts specific allowances paid to employees for official or personal expenses.
\n– Section 10(14)(i) allowances are exempt only if actually spent. Section 10(14)(ii) allowances have fixed exempt limits.
\n– Children’s education and hostel allowances have low fixed limits of Rs. 100 and Rs. 300 per child per month.
\n– The general transport allowance was removed in 2018 and replaced by the Standard Deduction.
\n– Transport allowance for disabled employees remains exempt up to Rs. 3,200 per month.<\/p>\n

Reviewing your salary structure against Section 10(14) and Rule 2BB helps you understand which allowances reduce your taxable income and by how much.<\/p>\n","protected":false},"excerpt":{"rendered":"

Section 10(14) of the Income Tax Act covers tax exemptions for specific allowances paid to employees. Many salaried employees receive allowances as part of their compensation package, and knowing which ones are tax-free can reduce your annual tax burden. This section is particularly useful for those in field roles, government jobs, or positions involving specialised […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14022","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(14) of the Income Tax Act covers tax exemptions for specific allowances paid to employees. Many salaried employees receive allowances as part of their compensation package, and knowing which ones are tax-free can reduce your annual tax burden. This section is particularly useful for those in field roles, government jobs, or positions involving specialised…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14022","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\/14022\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}