Tax Ready Reckoner

Section 10(10D) of the Income Tax Act, 1961, provides tax exemption on the sum received under a life insurance policy, including the bonus. This section ensures that the proceeds from life insurance policies are generally tax-free, subject to certain conditions. Scope of Exemption: The entire sum received under a life insurance policy (including the bonus) […]

Section 10(10CC) of the Income Tax Act, 1961, deals with the tax treatment of non-monetary perquisites provided by an employer to an employee. This section ensures that the tax liability on such perquisites is borne by the employer, and the employee is not directly taxed on these benefits. Definition of Non-Monetary Perquisites: Non-monetary perquisites are

Voluntary Retirement Scheme (VRS) is a mechanism used by companies to reduce their workforce by offering employees an option to retire voluntarily. The compensation received under VRS is governed by Section 10(10C) of the Income Tax Act, 1961, which provides exemptions for such payments. Eligibility for Exemption: The exemption applies to employees of: Public Sector

Compensation received by an individual or their legal heirs in the event of a disaster is governed by Section 10(10BC) of the Income Tax Act, 1961. This section provides an exemption for such compensation to alleviate the financial burden on affected individuals or families. Scope of Exemption: Compensation received from: The Central Governmentor a State Government. Any local

Retrenchment compensation is the amount paid to a workman (employee) at the time of termination of employment due to retrenchment (layoff) or closure of the business. The tax treatment of retrenchment compensation is governed by Section 10(10B) of the Income Tax Act, 1961, which provides exemptions for such payments. Eligibility for Exemption: The exemption applies

Leave encashment refers to the amount received by an employee in exchange for unused leave balance at the time of retirement, resignation, or superannuation. The tax treatment of leave encashment is governed by Section 10(10AA) of the Income Tax Act, 1961, which provides exemptions for such payments. Exemption under Section 10(10AA): Exemption for Government Employees:

The commuted value of pension refers to the lump sum amount received by an employee in lieu of a portion of their pension. This is governed by Section 10(10A) of the Income Tax Act, 1961, which provides the rules for its taxability and exemptions. Types of Pension Commutation: Government Employees: Pension received by government employees

Gratuity is a payment made by the employer to an employee in appreciation of the past services rendered by the employee. Gratuity can either be received by: the employee himself at the time of his retirement; or the legal heir on the event of the death of the employee. Gratuity received by an employee on