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Income Exempt from Tax

All receipts which give rise to income are taxable unless they are specifically exempted from tax under the Act. Such exempted income are enumerated in section 10 of the Act. The same are summarised in the table below:-

Section Nature of Income Exemption limit, if any
1 2 3
10(1) Agricultural income  
10(2) Share from income of HUF  
10(2A) Share of profit from firm  
10(3) Casual and non-recurring receipts Winnings from races Rs.2500/- other receipts Rs.5000/-
10(10D) Receipts from life Insurance Policy  
10(16) Scholarships to meet cost of education  
10(17) Allowances of MP and MLA. For MLA not exceeding Rs. 600/- per month
10(17A) Awards and rewards  
  (i) from awards by Central/State Government  
  (ii) from approved awards by others  
  (iii) Approved rewards from Central & State Governments  
10(26) Income of Members of scheduled tribes residing in certain areas in North Eastern States or in the Ladakh region. Only on income arising in those areas or interest on securities or dividends
10(26A) Income of resident of Ladakh On income arising in Ladakh or outside India
10(30) (i) Subsidy from Tea Board under approved scheme of replantation  
10(31) (ii) Subsidy from concerned Board under approved Scheme of replantation  
10(32) Minor's income clubbed with individual Upto Rs. 1,500/-
10(33) Dividend from Indian Companies, Income from units of Unit Trust of India and Mutual Funds, and income from Venture Capital Company/fund.  
10(A) Profit of newly established undertaking in free trade zones electronic hardware technology park on software technology park for 10 years (net beyond 10 year from 2000-01)  
10(B) Profit of 100% export oriented undertakings manufacturing articles or things or computer software for 10 years (not beyond 10 years from 2000-01)  
10(C) Profit of newly established undertaking in I.I.D.C or I.G.C. in North-Eastern Region for 10 years  
Income from interest
10(15)(i)(iib)(iic)

Interest, premium on  redemption or other payments from notified securities, bonds, Capital investment bonds, Relief bonds etc.

To the extent mentioned in notification
10(15)(iv)(h) Income from interest payable by a Public Sector Company on notified bonds or debentures  
10(15)(iv)(i) Interest payable by Government on deposits made by employees of Central or State Government or Public Sector Company of money due on retirement under a notified scheme  
10(15)(vi) Interest on notified Gold Deposit bonds  
10(15)(vii) Interest on notified bonds of local authorities  
Income from Salary
10(5) Leave Travel assistance/ concession Not to exceed the amount payable by Central Government to its employees
10(5B) Remuneration of technicians having specialised knowledge and experience in specified fields (not resident in any of the four preceding financial years) whose services commence after 31.3.93 and tax on whose remuneration is paid by the employer

Exemption in respect of income in the from of tax paid by employer for a period upto 48 months

 

10(7) Allowances and perquisites by the government to citizens of India for services abroad  
10(8) Remuneration from foreign governments for duties in India under Cooperative technical assistance programmes. Exemption is provided also in respect of any other income arising outside India provided tax on such income is payable to that Government.  
10(10) Death-cum-retirement Gratuity-  
  (i) from Government  
  (ii) Under payment of Gratuity Act 1972 Amount as per Sub-sections (2), (3) and (4) of the Act.
  (iii) Any other Upto one-half months salary for each year of completed service.
10(10A) Commutation of Pension-  
  (i) from government, statutory Corporation etc.  
  (ii) from other employers Where gratuity is payable - value of 1/3 pension.  Where gratuity is not payable - value of 1/2 pension.
  (iii) from fund set up by LIC u/s 10(23AAB)  
10(10AA) Encashment of unutilised earned leave  
  (i) from Central or State government  
  (ii) from other employers Upto an amount equal to 10 months salary or Rs. 1,35,360/- which ever is less
10(10B) Retrenchment compensation Amount u/s. 25F(b) of Industrial Dispute Act 1947 or the amount notified by the government, whichever is less.
10(10C) Amount received on voluntary retirement or termination of service or voluntary separation under the schemes prepared as per Rule 2BA from public sector companies, statutory authorities, local authorities, Indian Institute of Technology, specified institutes of management or under any scheme of a company or Co-operative Society Amount as per the Scheme subject to maximum of Rs. 5 lakh
10(11) Payment under Provident Fund Act 1925 or other notified funds of Central Government  
10(12) Payment under recognised provident funds To the extent provided in rule 8 of Part A of Fourth Schedule
10(13) Payment from approved Superannuation Fund  
10(13A) House rent allowance least of-
    (i) actual allowance
    (ii) actual rent in excess of 10% of salary
    (iii) 50% of salary in Mumbai, Chennai, Delhi and Calcutta and 40% in other places
10(14) Prescribed [See Rule 2BB (1)] special allowances or benefits specifically granted to meet expenses wholly necessarily and exclusively incurred in the performance of duties To the extent such expenses are actually incurred.
10(18) Pension including family pension of recipients of notified gallantry awards  
Exemptions to Non-citizens only
10(6)(i)(a) and (b) (i) passage money from employer for the employee and his family for home leave outside India  
  (ii) Passage money for the employee and his family to 'Home country' after retirement/termination of service in India.  
10(6)(ii) Remuneration of members of diplomatic missions in India and their staff, provided the members of staff are not engaged in any business or profession or another employment in India.  
10(6)(vi) Remuneration of employee of foreign enterprise for services rendered during his stay in India in specified circumstances provided the stay does not exceed 90 days in that previous year.  
10(6)(xi) Remuneration of foreign Government employee on training in certain establishments in India.  
Exemptions to Non-residents only
  Refer Chapter VII (Para 7.1.1)  
  Chapter VIII (Para 8.4)  
  Chapter IX  
  Chapter X (Para 10.4)  
Exemptions to Non-resident Indians (NRIs) only
  Refer Chapter XI  
Exemptions to funds, institutions, etc.
10(14A) Public Financial Institution from exchange risk premium received from person borrowing in foreign currency if the amount of such premium is credited to a fund specified in section 10(23E)  
10(15)(iii) Central Bank of Ceylon from interest on securities  
10(15)(v) Securities held by Welfare Commissioners Bhopal Gas Victims, Bhopal from Interest on securities held in Reserve Bank's SGL Account No. SL/DH-048  
10(20) any local Authority (a)  Business income derived from Supply of water or electricity any where. Supply of other commodities or service within its own jurisdictional area.
    (b)  Income from house property, other sources and capital gains.
10(20A) Housing or other Development authorities  
10(21) Approved Scientific Research Association  
10(23) Notified Sports Association/ Institution for control of cricket, hockey, football, tennis or other notified games.  
10(23A) Notified professional association/institution All income except from house property, interest or dividends on investments and rendering of any specific services
10(23AA) Regimental fund or Non-public fund  
10(23AAA) Fund for welfare of employees or their dependents.  
10(23AAB) Fund set up by LIC of India under a pension scheme  
10(23B) Public charitable trusts or registered societies approved by Khadi or Village Industries commission  
10(23BB) Any authority for development of khadi or village industries  
10(23BBA) Societies for administration of public, religious or charitable trusts or endowments or of registered religious or charitable Societies.  
10(23BBB) European Economic Community from Income from interest, dividend or capital gains  
10(23BBC) SAARC Fund  
10(23C) Certain funds for relief, charitable and promotional purposes, certain educational or medical institutions  
10(23D) Notified Mutual Funds  
10(23E) Notified Exchange Risk Administration Funds  
10(23EA) Notified Investors Protection Funds set up by recognised Stock Exchanges  
10(23FB) Venture capital Fund/ company set up to raise funds for invest­ment in venture Capital undertaking Income from invest­ment in venture capital undertaking
10(23G) Infrastructure capital fund, or infrastructure capital company Income from dividend, interest and long term capital gains from investment in approved infrastructure enterprise
10(24) Registered Trade Unions Income from house property and other sources
10(25)(i) Provident Funds Interest on securities and capital gains from transfer of such securities
10(25)(ii) Recognised Provident Funds  
10(25)(iii) Approved Superannuation Funds  
10(25)(iv) Approved Gratuity Funds   
10(25)(v) Deposit linked insurance funds  
10(25A) Employees State Insurance Fund  
10(26B)(26BB) and (27) Corporation or any other body set up or financed by and government for welfare of scheduled caste/ scheduled tribes/backward classes or minorities communities  
10(29) Marketing authorities Income from letting of godown and warehouses
10(29A) Certain Boards such as coffee Board and others and specified Authorities  
 

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