Section 10(14) of amended finance act 2020 provides tax benefits on allowances paid to salaried people working in hilly areas, tribal areas, duty on the island, duty in the border area or remote area, or any difficult/disturbed areas. Provisions of section 10(14)(ii)provide exemption towards the prescribed allowance granted to an employee to meet his personal expenses at either of the below place-(i) at the place where the duties of his office are ordinarily performed by him; or(ii) at the place where he ordinarily resides. The amount of exemption is (a) Amount received as allowance; or (b) Limit, as prescribed under rule 2BB(2) whichever is lower. .
The list of tax benefits available for working in difficult/disturbed areas are as under.
| Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations) | Amount exempt from tax varies from Rs.300 per month to Rs.7, 000 per month. |
| Border area allowances, Remote Locality allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations) | Amount exempt from tax varies from Rs.200 per month to Rs.1, 300 per month. |
| Tribal area allowance given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa | Rs.200 per month |
| Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs.2,600 per month |
| Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs.1,000 per month |
| Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs.3,900 per month |
| Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines | Up to Rs.800 per month |
| High Altitude Allowance is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations) | a) Up to Rs.1,060 per month (for altitude of 9,000 to 15,000 feet) b) Up to Rs.1,600 per month (for altitude above 15,000 feet) |
| Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations) | Up to Rs.4,200 per month |
| Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations) | Up to Rs.3,250 per month |
Source: Income Tax Department
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