Section 10 Income-Tax Exemptions — Full List

The exemptions continue, but from tax year 2026-27 (1 April 2026) they are relocated from Section 10 of the 1961 Act into Section 11 read with Schedules II to VII of the Income-tax Act, 2025. The categories, limits and conditions are unchanged. Because taxpayers and searches still refer to the familiar clause numbers (10(10), 10(13A), etc.), we keep using them here.

Section 10 incomes are exempt — they never enter total income. Chapter VI-A deductions (80C, 80D, etc.) are subtracted from gross total income after it is computed. Another difference: most Section 10 exemptions and most Chapter VI-A deductions are unavailable in the default new regime, but retirement-related Section 10 exemptions (gratuity, leave encashment, PF, NPS) survive in both regimes.

Yes. Income derived from land situated in India and used for agriculture — rent or revenue from the land, income from farming, and income from a farmhouse attached to agricultural land — is fully exempt under Section 10(1). However, the partial-integration rule applies: if you have both agricultural income above ₹5,000 and non-agricultural income above the basic exemption limit, the agricultural income is added only to fix the applicable tax rate slab, then tax on it is backed out. So agricultural income can push the rate on your other income higher, even though it stays tax-free.

HRA exemption is the least of three amounts: (1) actual HRA received; (2) rent paid minus 10% of salary (basic + DA); and (3) 50% of salary in a metro (Delhi, Mumbai, Kolkata, Chennai) or 40% in a non-metro. You must actually pay rent to claim it, and landlord PAN is needed if annual rent exceeds ₹1 lakh. HRA exemption is available only under the old regime — it cannot be claimed in the default new regime.

No. HRA exemption under Section 10(13A) is disallowed in the default new regime (Section 115BAC) from FY 2023-24. The same applies to LTA (10(5)) and most special allowances (10(14)). If HRA is a large part of your package, compare both regimes — the old regime with HRA may beat the new regime's lower slabs, ₹75,000 standard deduction and Section 87A rebate.

Section 10(14) exempts specified allowances granted to meet duties or personal expenses, subject to prescribed limits — for example children education allowance (₹100/month/child, up to two children), hostel allowance (₹300/month/child), and certain travel/transfer/uniform allowances. Most of these are available only in the old regime; the transport allowance for a specially-abled employee is one that continues in the new regime.

For government employees, gratuity is fully exempt. For private-sector employees covered by the Payment of Gratuity Act, the exemption is the least of: actual gratuity received, ₹20 lakh, or 15 days' salary (last drawn) for each completed year of service. For those not covered by the Act, it is the least of actual gratuity, ₹20 lakh, or half-month average salary per completed year. The ₹20 lakh is a lifetime limit across employers, and gratuity applies in both tax regimes.

Government employees get full exemption. For non-government employees, leave encashment received on retirement is exempt up to the least of: actual amount, ₹25 lakh (raised from ₹3 lakh with effect from 1 April 2023), 10 months' average salary, or the cash equivalent of unavailed leave (capped at 30 days per completed year of service). The ₹25 lakh is a lifetime limit, and it applies under both the old and new regimes. Leave encashment while still in service is fully taxable.

PPF maturity, including interest, is fully exempt under Section 10(11) with no ceiling. EPF maturity is exempt under Section 10(12) only after 5 years of continuous service; if you withdraw earlier, the accumulation is taxable and TDS at 10% applies under Section 192A on amounts over ₹50,000. Separately, since FY 2021-22, interest on your own EPF contribution exceeding ₹2.5 lakh in a year is taxable. Both exemptions apply in either tax regime.

On retirement or reaching 60, up to 60% of the NPS corpus withdrawn as a lump sum is exempt under Section 10(12A); the remaining 40% must be used to buy an annuity, whose pension is taxable as it is received. A partial withdrawal of up to 25% of your own contribution during the accumulation phase is exempt under Section 10(12B). Both exemptions apply in the old and new regimes.

Maturity proceeds are exempt if the annual premium never exceeded 10% of the sum assured (for policies issued after 1 April 2012). Two caps override this: for non-ULIP policies issued on or after 1 April 2023, if aggregate annual premium exceeds ₹5 lakh the maturity is taxable; for ULIPs issued on or after 1 February 2021, if premium exceeds ₹2.5 lakh the gains are taxed as capital gains under Section 112A. The death benefit is always fully exempt, regardless of premium.

No. Any scholarship granted to meet the cost of education is fully exempt under Section 10(16) — there is no monetary ceiling, and it applies whether the scholarship comes from the government, a private trust, an employer or a foreign institution, as long as it is genuinely used for education. This exemption continues in both the old and new regimes.

No, not anymore. Dividends were exempt in the shareholder's hands only up to FY 2019-20, when the company paid Dividend Distribution Tax. From FY 2020-21, dividends are taxable in the shareholder's hands at slab rates, and the company deducts TDS at 10% under Section 194 on dividends above ₹5,000 a year.

The default new regime disallows HRA (10(13A)), LTA (10(5)), constituency allowance (10(17)) and most special allowances (10(14)). Exemptions that continue in both regimes include agricultural income (10(1)), gratuity (10(10)), leave encashment (10(10AA)), commuted pension (10(10A)), PPF/EPF maturity (10(11)/10(12)), NPS lump sum (10(12A)), qualifying LIC maturity (10(10D)) and scholarships (10(16)). Instead of the lost exemptions, the new regime offers a ₹75,000 standard deduction and a Section 87A rebate making income up to ₹12 lakh tax-free.

It depends on how much you claim. If HRA, LTA and Chapter VI-A deductions (80C, 80D, home-loan interest) together are large, the old regime often wins. If you claim few exemptions, the new regime's lower slabs, ₹75,000 standard deduction and rebate up to ₹12 lakh taxable income usually give a lower tax. Run both through an income-tax calculator or ask a CA — the choice can be revisited each year for salaried taxpayers.