Section 10(14)(i) of the Income Tax Act of India is a real godsend for the people living on a salary and the employees. With it, the employees can take a deduction for tax on some allowances granted to them by their employer—that is, the money they spend on their job. Suppose you are traveling for your office work, buying uniforms, sending your kids to school, or simply paying for a helper—this section can make those money outflows mostly tax-free. The catch? One only saves tax on the money he actually spends (not an extra pocket).
Understanding salary exemptions can help you save a significant amount of tax every year. One such useful provision under Indian income tax law is Section 10(14)(i) of the Income Tax Act, 1961. This section allows salaried employees to claim tax exemption on certain allowances that are provided to meet official work expenses.
In this article, we explain Section 10(14)(i) in simple words, the types of allowances covered, conditions for claiming exemption, and how it impacts your taxable salary.
What Is Section 10(14)(i) of the Income Tax Act?
Section 10(14)(i) deals with special allowances paid by an employer to an employee for meeting expenses that are wholly, necessarily, and exclusively incurred for official duties.
The core idea is simple:
If your employer gives you money specifically to cover job-related expenses, that amount should not be taxed as part of your salary—provided you actually spend it for work purposes.
Allowances Covered Under Section 10(14)(i)
Below are the most common allowances that qualify for exemption under this section:
1. Travelling Allowance
This includes expenses incurred during official tours, business travel, or job-related transfers. The exemption is allowed only for the amount actually spent on travel.
2. Daily Allowance
Daily allowance is paid when an employee travels for official work and stays away from their regular place of duty. It covers food and daily expenses during such trips.
3. Conveyance Allowance (Official Purpose)
This allowance is given to cover conveyance expenses incurred while performing office duties, such as local travel for meetings or fieldwork. Daily commuting from home to office is not included.
4. Helper Allowance
If your role requires a helper or assistant to perform official duties, the allowance provided for this purpose can be claimed as tax-free under Section 10(14)(i).
5. Research or Training Allowance
Employees involved in research, academic activities, or professional training may receive special allowances. These are exempt if used strictly for the assigned work.
How Is the Exemption Calculated?
The exemption under Section 10(14)(i) is allowed based on a straightforward rule:
Exempt Amount = Lower of:
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Allowance received, or
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Actual amount spent on official work
Example:
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Allowance received: ₹30,000
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Actual expense incurred: ₹22,000
➡️ Exempt amount: ₹22,000
➡️ Taxable amount: ₹8,000
Conditions to Claim Exemption Under Section 10(14)(i)
To claim tax exemption under this section, the following conditions must be met:
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The allowance must be paid by the employer
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It should be meant exclusively for official expenses
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The employee must actually incur the expense
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Exemption is limited to the amount spent
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Documentation may be required if demanded by tax authorities
If the allowance is not used for work purposes, it becomes fully taxable.
Section 10(14)(i) and Old vs New Tax Regime
The exemption under Section 10(14)(i) is generally available only under the old tax regime.
If you choose the new tax regime, most exemptions and allowances are not permitted.
Before filing your income tax return, compare both regimes to decide which one is more beneficial.
Why Section 10(14)(i) Is Important for Salaried Employees
This section helps employees by:
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Reducing overall taxable income
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Ensuring official expenses are not taxed
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Improving take-home salary legally
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Creating a fair salary structure
It also helps employers design employee-friendly compensation plans.
Key Takeaways
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Section 10(14)(i) provides tax exemption on allowances meant for official work
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Exemption is allowed only for actual expenses incurred
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Applicable mainly under the old tax regime
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Proper understanding can help reduce tax liability
Conclusion
Section 10(14)(i) of the Income Tax Act ensures that employees are not taxed on money meant to cover job-related expenses. By correctly using this provision and maintaining clarity on eligible allowances, salaried individuals can legally lower their tax burden while staying compliant with tax laws.
Understanding such exemptions is a smart step towards better tax planning and higher take-home income.
