Income Tax Guide | Legislative Allowances

Section 10(17): Income Tax Exemption for Daily and Constituency Allowances

Section 10(17) of the Income-tax Act, 1961 excludes specified daily allowances and constituency allowances received by Members of Parliament and members of State Legislatures from total income. The exemption applies to the particular statutory allowances identified in the provision; it is not a blanket exemption for a legislator's salary or every payment received in public office.

Eligible recipientsMembers of Parliament and State Legislatures

Qualifying incomeSpecified daily and constituency allowances

Exemption amountEntire qualifying allowance

Key testAllowance must fall within the statutory category

Meaning of Section 10(17) under the Income-tax Act, 1961

Section 10 lists income that is not included in computing total income. Under Section 10(17), the following types of payments are exempt when the applicable statutory requirements are met:

Daily allowance received by a Member of Parliament, a member of a State Legislature, or a member of any committee thereof.
Constituency allowance of an MP received under the Members of Parliament (Constituency Allowance) Rules, 1986, as applicable.
Constituency allowance of a State legislator received under rules made by the State Legislature concerned.

The exemption concerns the nature and legal basis of the payment, rather than the label chosen in a payroll statement. A payment called an allowance does not automatically qualify.

Who is eligible for this exemption?

The eligible recipient must be a Member of Parliament (MP), a member of a State Legislature (MLA or MLC, as relevant), or, in the case of the specified daily allowance, a member of a committee of Parliament or a State Legislature. The precise entitlement to the allowance arises under the applicable parliamentary or state law and rules.

What is a daily allowance?

A daily allowance is an allowance payable for days of qualifying legislative or committee duty under the relevant governing law or rules. Where the recipient and payment meet Section 10(17)'s conditions, the eligible daily allowance is excluded from taxable total income. This exemption should not be confused with general travel, accommodation or other reimbursements, which require separate legal analysis.

What is a constituency allowance?

A constituency allowance is an allowance authorised to support a legislator's constituency-related responsibilities. For MPs, Section 10(17) refers to the Members of Parliament (Constituency Allowance) Rules, 1986. For members of State Legislatures, the exemption concerns constituency allowances received under rules made by the respective State Legislature. The amount payable is determined by the governing rules, which may be amended; Section 10(17) itself does not set one uniform rupee amount for every legislature.

How much of the allowance is tax-exempt?

The full amount of a qualifying daily allowance or constituency allowance is exempt under the relevant clause of Section 10(17). There is no separate general percentage cap in this provision. However, the exemption cannot be extended to salary, other remuneration, or unrelated allowances merely because the recipient is a legislator.

Are MPs' and MLAs' salaries exempt?

No general exemption for legislative salary follows from Section 10(17). Salary, remuneration, pension, interest, investments and other receipts must be assessed under the applicable income-tax provisions. The correct tax classification of legislative remuneration may differ from employment salary; Section 10(17) only identifies specified exempt allowances.

Illustrative calculation

Assume a State legislator receives Rs. 90,000 during a tax year as a constituency allowance expressly payable under the applicable State Legislature rules, and Rs. 1,20,000 as another form of remuneration. If the constituency allowance satisfies the statutory conditions, the Rs. 90,000 qualifying allowance is exempt. The remaining remuneration must be assessed separately under the relevant tax law; it does not become exempt by association.

Evidence and compliance

Keep the relevant payment statement identifying daily or constituency allowances separately.
Check the parliamentary or State Legislature law and rules authorising each allowance.
Retain supporting records of legislative or committee membership and the relevant period.
Follow the applicable income-tax return instructions for disclosure of exempt income, if required.
Do not combine non-qualifying payments with exempt allowances when preparing a return.

Law applicable from 1 April 2026

Section 10(17) is the citation used under the Income-tax Act, 1961. The Income-tax Act, 2025 took effect from 1 April 2026. For tax years governed by the newer Act, check the corresponding exempt-income provisions, commencement and transitional rules instead of assuming that the 1961 Act's section numbering remains unchanged. For earlier tax periods, apply the legislation and amendments relevant to those periods.

Official sources and related guidance

Updated 10 October 2026. This general guide should be read with the statutory provision and the rules governing the specific allowance and tax year.