Which allowances are tax exempted

Expenditure on scientific research within 3 years before commencement of business in the nature of purchase of materials and salary of employees other than perquisite is allowed as deduction in the year of commencement of business to the extent certified by prescribed authority. Contribution to approved research association, university, college or other institution to be used for scientific research shall be allowed as deduction Subject to certain conditions. Contribution to an approved company registered in India to be used for the purpose of scientific research is allowed as deduction Subject to certain conditions.

Contribution to approved research association, university, college or other institution with objects of undertaking statistical research or research in social sciences shall be allowed as deduction Subject to certain conditions. Capital expenditure incurred during the year on scientific research relating to the business carried on by the assessee is allowed as deduction Subject to certain conditions.

Capital expenditure incurred within 3 years before commencement of business is allowed as deduction in the year of commencement of business. Payment to a National Laboratory or University or an Indian Institute of Technology or a specified person is allowed as deduction. The payment should be made with the specified direction that the sum shall be used in a scientific research undertaken under an approved programme.

Any expenditure incurred by a company on scientific research including capital expenditure other than on land and building on in-house scientific research and development facilities as approved by the prescribed authorities shall be allowed as deduction Subject to certain conditions. Expenditure on scientific research in relation to Drug and Pharmaceuticals shall include expenses incurred on clinical trials, obtaining approvals from authorities and for filing an application for patent.

Deduction shall be allowed if company enters into an agreement with the prescribed authority for co-operation in such research and development and fulfils conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed. Company engaged in business of bio-technology or in any business of manufacturing or production of eligible articles or things.

Note: No deduction of any capital expenditure above Rs 10, shall be allowed where such expenditure is incurred in cash.

Note: Such deduction is available to Indian company in case of following business, namely;-. No deduction of any capital expenditure shall be allowed in respect of which cash payment is made above Rs.

Expenditure incurred by a company not being expenditure in the nature of cost of any land or building on any notified skill development project is allowed as deduction Subject to certain conditions.

Note: i No deduction shall be allowed to a company engaged in manufacturing alcoholic spirits or tobacco products. Section Section 54B. Section 54D. Section 54EC. Section 54F. Section 54G. Section 54GA.

Section 54GB. Agriculture land used by taxpayer or by his parents or HUF for agriculture purposes in last 2 years before its transfer. Compulsory acquisition of land or building forming part of industrial undertaking which was used for industrial purposes for at least 2 years before its acquisition.

Any long term asset other than a residential house property provided on date of transfer taxpayer does not own more than one residential house property except the new house.

Land, building, plant or machinery, in order to shift industrial undertaking from urban area to rural area. Land, building, plant or machinery, in order to shift industrial undertaking from urban area to SEZ. Provisions of this section shall not apply to any transfer of residential property made after March 31, However, in case of an investment in eligible start-up, the residential property can be transferred up to March 31, With effect from Assessment Year , a taxpayer has an option to make investment in two residential house properties in India.

This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs.

Land, building, plant or machinery, in order to shift industrial undertaking to rural area. April 1, , eligible start-up is also included in definition of eligible company. The eligible company should utilize the amount of subscription for purchase of new assets i.

However, In the case of eligible startup, the new asset shall include computers or computer software. Investment by the assessee - Before due date for furnishing of return under Sec. Investment in new assets or capital gains, whichever is lower, however, subject to Rs. If new asset is transferred or it is converted into money or a loan is taken on its security. If new asset is transferred within a period of 3 years from the date of its acquisition.

Where assessee takes loans or advance on security of such specified asset, he shall be deemed to have transferred such asset on the date on which such loan or advance is taken.

If equity shares in company or new asset acquired by company is sold or transferred within a period of 5 years from date of acquisition.

Salaried employees form the major chunk of the overall taxpayers in the country and the contribution they make to the tax collection is quite significant. Income tax deductions offer a gamut of opportunities for saving tax for the salaried class. In this article, we try to list some of the major deductions and allowances, available to the salaried persons, using which one can reduce their income tax liability.

This could be totally or partially exempted from income tax. So, please keep rent receipts and evidence of any payment made towards rent. You may claim the least of the following as HRA exemption. Total HRA received from your employer b. This was in the place of the transport allowance Rs. As a result, salaried people could avail an additional income tax exemption of Rs. The limit of Rs. Read more on Standard Deduction. The income tax law also provides for an LTA exemption to salaried employees, restricted to travel expenses incurred during leaves by them.

You can claim LTA twice in a block of four years. Below are the restrictions which are applicable to LTA:. Read more about how to claim LTA. A taxpayer may incur expenses on mobile and telephone used at residence.

The income tax law allows an employee to claim a tax free reimbursement of expenses incurred. An employee can claim reimbursement of the actual bill amount paid or amount provided in the salary package, whichever is lower. Employees incur expenses on books, newspapers, periodicals, journals and so on. The income tax law allows an employee to claim a tax free reimbursement of the expenses incurred.

The reimbursement allowed to an employee is the lower of the bill amount or the amount provided in the salary package. Your employer may provide you with meal coupons such as sodexo. Such food coupons are taxable as perquisite in the hands of the employee.

However, such meal coupons are tax exempt up to Rs 50 per meal. Consequently, the yearly exemption works up to Rs 26, Businesses, these days operate in multiple locations across the country.

There are possibilities that you are asked to shift to a different city for business reasons. Such a relocation can cause expenses such as shifting to a new house, moving furniture, car transportation cost, car registration charges, getting your kids admitted to a new school, and more. Fortunately, these expenses are to be borne by the employer. Sometimes, the employer makes a direct payment for such expenses. Here is a summary of the tax liability of these expenses :.

The employer may provide you education allowance for your children as part of your salary. Such allowance received by the employer towards children education is exempt from tax.

Tax exemptions may include complete relief from taxes or tax only on a portion of your income and to encourage investments, the government generally offers tax exempt entities to invest in. Such entities are exempted from a single or multiple taxation laws. For example, investments in the Sukanya Samriddhi Scheme are fully tax exempt. Money deposited under this scheme will be exempted from tax at the time of investment, accumulation of interest and payout of returns i. In case of tax deductions, your income tax liabilities decrease by a specified amount for spending money in specified avenues.

You invest in various schemes to reduce your taxable income, for example, you can get tax deduction by paying life insurance premiums or towards payments of your home loan principal amount. Tax deductions are offered by government to tempt taxpayers to participate in programs carrying societal benefits. Deduction is termed as reduction from something. Tax Deduction is basically the deduction allowed in income tax on application of income in prescribed instruments. These all are available at the discretion of the taxpayer.