Central

Section 10A of The Salaries and Allowances of Ministers Act, 1952

1[10A. Exemption from liability to pay income-tax on certain perquisites received by a Minister.Notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), the value of rent free furnished residence (including maintenance thereof) provided to a Minister under sub-section (1) of section 4 shall not be included in the computation of his income chargeable under the head "Salaries" under section 15 of the Income-tax Act, 1961 (43 of 1961).]

Summary

Ministers do not have to pay income tax on the value of the rent free furnished home provided to them.
This tax exemption includes the cost of maintaining the home, such as local taxes, electricity, and water.
The rule applies despite anything written in the Income-tax Act, 1961 (43 of 1961).
The tax-free benefit refers to the home provided under sub-section (1) of section 4.
The value of this home is left out when calculating the Minister's taxable income under the category of "Salaries" in section 15 of the Income-tax Act, 1961 (43 of 1961).

Practical examples

1John is an ordinary citizen who is given a free house and paid utilities worth 50,000 rupees a month by his employer, but he must pay income tax on this benefit. If he is appointed as a Minister, the tax office cannot tax him on the value of this house because of this rule.

2In the year 2024, Sarah receives a rent-free bungalow and free electricity worth 100,000 rupees a year. Under this section, when she files her income tax, the tax authority does not count this 100,000 rupees as part of her taxable salary income.

FAQ

1. Does a Minister have to pay income tax on the value of their free government housing?

No, the value of the rent free furnished house is completely exempt from income tax.

2. Does this tax exemption cover electricity and water charges for the house?

Yes, the exemption covers the maintenance of the house, which includes electricity, water, and local rates.

3. Which head of income is this benefit excluded from?

It is excluded from the head of income called "Salaries" under section 15 of the Income-tax Act, 1961 (43 of 1961).

4. Does this rule apply even if the general income tax law says otherwise?

Yes, it applies notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961).

Test yourself

Q1.Which Act is specifically overridden by Section 10A to provide this tax exemption?

Q2.Under which section of the Income-tax Act, 1961, is the head of income "Salaries" defined for this exemption?

Q3.Under which section and sub-section of the Ministers Act is the rent-free furnished residence provided?

Q4.What is included in the tax exemption besides the rent-free furnished residence itself?

Q5.What is the Act Number of the Income-tax Act mentioned in Section 10A?

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