Various income tax exemptions and deductions are available for army personnel in AY 2025-26. Let's check what are those deductions:
Income which are Taxable
| Component | Tax Treatment |
| Basic Pay, Grade Pay | Taxable |
| Pension | Taxable |
| Disability Pension | Fully Exempt |
| Commuted Pension | Exempt |
| Gratuity | Exempt u/s 10(10) |
| Leave Encashment | Exempt u/s 10(10AA) |
| Uniform Allowance | Exempt u/s 10(14)(i) |
| AFPP Contribution, AGIF Premium, PLI | Deductible u/s 80C as PPF |
Exemption Provided u/s 10(14)(i)
| Allowance | Purpose | Exemption |
| Travel on Tour/Transfer | Relocation/Travel for Duty | Actual Cost |
| Daily Charges/ Conveyance | Travel For Official | Actual |
| Uniform | For Purchase or Maintenance | Actual |
| Ration Money | Only Prescribed For Army Officers | Fully Exempted |
Travel Allowance vs. Transport Allowance (TPT)
Travel Allowance is provided u/s Sec 10(14)(i) + Rule 2BB(1)(a)-(b) for official travel or transfers and is exempt based on actual expenses.
Transport Allowance (TPT) is covered u/s 10(14)(ii) + Rule 2BB(2)(11) for daily office commute and is exempt up to ₹3,200/month, but only for disabled employees.
Exemption Provided u/s 10(14)(ii)
This exemptions are the specific allowances depend on notified areas and conditions with prescribed limits.
- High altitude allowance such as Leh, Tawang, Lahaul, J&K. Arears 9000-15,000 feet is exempt up to ₹1060 per month. Areas above 15,000 feet (glacier posts, high Himalayas) get ₹1600 per month exemption.
- Siachen allowance is exempt at ₹7000 per month.
- Highly active field areas like LOC and forward high-risk areas get ₹4200 per month.
- Field area allowance for specified defence field zones Himachal Pradesh, Jammu and Kashmir is ₹2600.
- Modified field areas in Rajasthan, Punjab, Arunachal Pradesh fringe zones get ₹1000.
- Counter-insurgency allowance (anti terrorism areas) is exempt at ₹3900 per month.
- Island duty allowance (e.g., Andaman, Nicobar, Lakshadweep) is also exempt upto ₹3250.
- Underground allowance ( such as Mines, Tunnel posting) exempt up to ₹800.
- Children education allowance exempt up to ₹200 per child for two children.
- Hostel expenditure allowance exempt up to ₹300 per child for two children.
- Tribunal and remote area allowances vary between ₹200 to ₹1300 depending on location.
Deductions Covered Chapter VI-A
| Section | Eligible | Limit |
| Section 80C | For LIC, NSC, tuition fees, etc. | ₹1.5 lakh |
| Section 80CCD(1B) | For additional NPS (Tier 1) contributions. | ₹50,000 |
| Section 80D | For Mediclaim premiums. | ₹25,000 (self/family), ₹50,000 (senior citizens) |
| Section 24(b) | For housing loan interest. | ₹2 lakh |
Point To Note
Armed Forces Provident Fund (AFPF), Army Group Insurance Fund (AGIF) and Postal Life Insurance (PLI) deductions are shown in pay slips and can be claimed under Section 80C up to ₹1.5 lakh annually.
Click Here To Know About ITR For Army Personnel FY 2024-25.
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