Section 10 Exemptions – A summary of the activity

Through this activity, you can specify the various exemptions applicable to an assessee under section 10. This section specifies a list of exemptions and the maximum amount that an assessee can avail for each exemption item. This amount is deducted from his/her total income for computing the gross taxable income. The various exemptions specified under this section are referred as exemption items. These are HRA (house rent allowance), education allowance, hostel allowance, leave encashment, gratuity, superannuation, etc.  A list of exemption items and maximum exempted amount are specified by the Income Tax Authorities.

Note that assessee refers to a person who is liable to pay tax under the Income Tax Act. In our context, assessee refers to an employee. Total income is defined as the income earned by the employee for a tax year.

Specifying Section 10 exemptions for a tax year involves:

• A tax year for which the exemption items are applicable.

• Specifying the maximum exempted value for each item.

Getting familiar with the pages inside

Prerequisites

The tax year must have been defined in the “Create Tax Year” activity.

The various exemption items must be defined in the quick codes.

What you can do in this activity

Specify Section 10 Exemptions

Section 10 Exemptions

You can specify the various exemptions applicable to employees under section 10 in the “Section 10 Exemptions page. You can also modify these details.

• Specify the tax year for which the exemptions are applicable.

• Specify the maximum exempted value for each item.

• Save the details entered.