Section 10 of Indian Income Tax Act deals with all incomes which are exempt from income tax. We are giving the details of few important exempted incomes as under:-

  1. Agricultural Income is exempt from income tax. However, If net income from agriculture exceeds Rs.5000/=, then it will be taken for determining the tax rates of income.
  2. Any amount received by individual who is member of Hindu Undivided Family (HUF) out of income of the family irrespective of  whether income tax is payable or not by the HUF on its total income.
  3. Any amount received by a partner from the income of partnership firm is exempt of income tax. Any amount means his/her share of profit as per partnership deed. Logic of non-inclusion of this type of receipt from partnership firm is that the income tax is already being paid on income of firm. So, to avoid double taxation, share from profit from the firm is not included in income of any individual.
  4. Interest on Non-Residential (External) Account held by a person who is resident outside India or a person who has got permission from Reserve Bank of India to maintain such account.
  5. Interest on securities or bonds specified by the central government up to 31.05.02. Premium on their redemption is also exempt.
  6. Interest on specified saving certificates issued before 01.06.2002 by the Central Government, subscribed by a non-resident Indian in convertible foreign exchange remitted from out side India through official channels.
  7. Value of leave travel concession (LTC) received by an employee from his/her employer for himself/spouse/dependent mother, father/sister/brother in connection with his proceeding on leave or after retirement or termination to any part of India.
  8. Income of foreigners is exempt like (a) remuneration to an official Embassy, High Commissions, Legation, Affairs,Commissioner, Consulate or trade representative of a foreign State or as a member of staff of any of these officials, (b) remuneration received by employees of foreign enterprises, (c) salaries to non-resident employed on a foreign ship, (d) remuneration received by certain foreigners, on training in certain establishment.
  9. Income by way of Royalty or fee for technical services, arising to a foreign company under an agreement with the Central Government, in connection with projects of Indian security.
  10. Allowances/Perquisites for services rendered outside India, paid or allowed outside India by the Government to an Indian citizen.
  11. Remuneration received by an individual who is assigned duties out side India in connection with any co-operative technical assistance programme or project under an agreement between Government of India and a foreign Government, directly or indirectly from such foreign Government.
  12. Income of consultant  as remuneration or fees, who is engaged by an international organization for rendering technical services in India in connection with any technical assistance proogramme or project under an agreement, approved by the prescribed authority between the Central Government and the agency.
  13. Income of a family member of a technical assistant/consultant /employee who is engaged by an internal agency, accompanying him to India, which accrues or arises outside Inida and is taxable in that foreign State of the country of origin of such member.
  14. Any gratuity received on retirement, termination or death, by the employee, his widow or dependent is exempt from income tax subject to certain terms and conditions. But maximum limit of exemption can not exceed Rupees ten lakhs.
  15.  Commuted Pension received by the employee of State/Central Government is exempt from income tax. Any amount received from pension fund set up by any insurer, is also exempt from income tax. Commuted pension received by an employee of private organizations from his/her employer is exempt subject to certain terms and conditions.
  16. Any amount of Leave Encashment received by any employee of State/Central Government at the time of his/her retirement is totally exempt from income tax. In case of other employees, receipt from leave encashment is exempt subject to certain terms and conditions.
  17. Any compensation received by an employee under Industrial Dispute Act or under any other Act or under any award or contract of service or otherwise, at the time of his/her retrenchment, is exempt subject to a maximum limit of Rupees five lakhs. However, compensation received under any scheme, approved by Central Government is exempt with out any limit.
  18. Payment under Bhopal Gas Leak Disaster (Processing of Claims Act,1985) or any scheme frame thereunder.
  19. Tax paid by an employer on any income by way of perquisites on behalf of his employee.
  20. Any amount received by any employee (whether private or government) under Voluntary Retirement Scheme, is exempt subject to a limit of Rupees five lakhs.
  21. Compensation on account of a Disaster received or receivable from Central/State Government or local authority by an individual or his legal heir will be treated as exempt income.
  22. Any amount received by an individual under life insurance policy at the time of its maturity including bonus amount, is exempt from income tax up to any limit. But the amount of premium should not be more than 20% of sum assured during the period of 01.04.2003 to 31.03.12.  An insurance policy issued from 01.04.12 onwards in respect of which the premium payable for any year should not exceeds 10% of the actual capital sum assured.
  23. Any amount received by any individual/HUF from Public Provident Fund (PPF) including Interest is exempt up to any limit.
  24. Any amount received by any employee from Recognized Provident Fund including Interest is exempt from income tax up to any limit.
  25. Any amount received from Sukanya Samriddhi Account under the Sukanya Samriddhi Rules,2014.
  26. House Rent Allowance received by any employee from his employer to meet expenditure incurred in respect of payment of rent for residential accommodation, is exempt subject to the conditions:-  (a) Actual HRA received, or (b)Rent paid in excess of one-tenth of salary or (c) 50% of salary if the accommodation is situated at Delhi, Mumbai, Kolkata, or Chennai  or (d) 40% of salary if the accommodation is situated at any other place, which ever is the less.  Please note that HRA will not be exempt if the residential accommodation is occupied by the assessee is owned by him or the assessee has not actually spent any expenses on account of rent. For this purpose of calculation of exemption of HRA, Salary includes Dearness Allowance if the terms & conditions of employment so provide i.e. where Dearness Allowance is taken into account while calculating Provident Fund & Allowance etc.
  27. Any amount received as interest of certain notified bonds, securities, certificates and deposits is exempt from income.
  28. Scholarship granted to  meet the cost of education.
  29.  Any daily allowances, constituency allowance received by Members of Parliament or Member of any State Legislature is exempt from income tax.
  30. Any amount received under Swatantrata Sainik Pension Scheme is exempt from income tax.
  31. 19. Pension received by a Central or State Government employee who has been awarded Param Vir Chakra/Maha Vir Chakra/Vir Chakra or other notified gallantry award, is totally exempt from income tax.
  32. Family pension received by a widow/children/nominated heirs, of a member of the armed forces including para-military forces who died in the course of operational duties, in prescribed circumstances and subject to prescribed conditions.
  33. Annual Value of a palace in the occupation of an ex-ruler.
  34. Income of local authority like Panchayat, Municipality, Municipal Committee, District Board etc, is exempt from income tax.
  35. Income of approved scientific and research association is exempt from income tax subject to certain conditions.
  36. Income of a news agency set up in India, which applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner or its members.
  37. Income of a public charitable trust is exempt from income tax subject to specified conditions.
  38. Income of a Professional Association set up for the control, supervision, regulation or encouragement of the professions of law, medicine, accountancy, engineering, architecture or other notified profession (i.e. Company Secretary, Chemistry Material Management and Town Planning) subject to specified conditions.
  39. Income received by any regimental fund or non-public fund established by the armed forces for the welfare of the past and present members of the forces or their dependent.
  40. Income of a Pension Fund set up by the Life Insurance Corporation of India or by any other insurance company.
  41. Income of Khadi and Village board is exempt from income tax.
  42. Income of religious institutions is exempt from income tax subject to specified conditions.
  43. Income of the European Economic Community derived in India by way of interest, dividends or capital gains from investments made out of its funds under specified scheme.
  44. Income of SAARC Fund for Regional Projects.
  45. Income of the Insurance Regulatory and Development Authority.
  46. Income of the North-Eastern Development Finance Corporation Ltd. to the extent of nil from financial year 2009-10 and onwards.
  47. Income of the Central Electricity Regulatory Commission.
  48. Income of the Prsar Bharti (Broadcasting corporation of India)
  49. Income of P.M. National Relief fund or P.M. Fund (Promotion of Folk Ats)
  50. Income of National Foundation for Communal Harmony.
  51. Income of Swachh Bharat Kosh.
  52. Income of Clean Ganga.
  53. Income of an University/educational insttution, hospital or medical institution wholly or substantially finance by the Government or the annual receipts of which do not exceed Rs.1 crore or which is approved by the prescribed authority.
  54. Approved fund, charitable/religious institution or trust shich applies its income wholly and exclusively in pursuance of its objects..
  55. Income of Mutual Fund.
  56. Income of Secularization Trust from the activity of secularization
  57. Income of notified Investor Protection Fund set up by recognized stock exchanges in India.
  58. Income of notified Investor Protection Fund set up by commodity exchanges in India.
  59. Income of notified Investor Protection Fund set up by a depository, by way of contribution from a depository.
  60. Rental Income of a Business Trust being a real estate investment trust from its real estate asset.
  61. Income of Trade Union or Association of trade unions by way of income from house property and income from other sources.
  62. Income from dividend from shares or mutual funds is exempt from income tax. With effect from financial year 2016-17, Dividend from a domestic company and subjected to additional income tax under section 115-O (excluding dividend income in aggregate from a domestic company or companies exceeding Rs.10 lakh of a resident individual/HUF/firm, subjected to 10% tax under section 115BBDA).
  63. Any long term capital gains from transfer of equity shares of a company or units of an equity oriented fund on or after 01.04.2004 are exempt from income tax. With effect from 01.04.17, the exemption is not available if the transaction of acquisition of of equity share is made on or after 01.10.2004 and is not chargeable to Security Transaction Tax.
  64. Income of Statutory Provident Fund is exempt from income tax.
  65. Income of Employee’s State Insurance Fund is exempt from income tax.
  66. Income of a notified non-profit body or authority is exempt from income tax.
  67. Income from tax free bonds.
  68. Income of each minor child up to Rs.1500/= is exempted. Otherwise if the income of minor child is more than 1500/= then it shall be included in the income of his/her parent ‘s income
  69. Income of an Agricultural Product Market Committee or Board.
  70. Income of a Corporation, body etc. set up for promoting the interest of the members of Scheduled Castes or Scheduled Tribes or backward classes or of any two or all of them.
  71. Income of a Corporation established by the Central/State Government for promoting the interest of a notified minority community i.e. Muslims, Christians, Sikhs, Buddhists and Zoroastrians (Parsi)
  72. Income of Ex-Servicemen Corporation.
  73. Income of Cooperative Society formed for promoting the interest of members of Scheduled Castes or scheduled Tribes or both.
  74. Income of Certain Boards/Authorities, namely Coffee Board, Rubber Board, Tea Board, Tobacco Board, Marine Products Export Development Authority, Spices Board, Coir Board.
  75. Subsidy received under a notified scheme from Tea Board, Rubber Board, Coffee Board or any other commodity Board.
  76. Income from Notified international sporting event held in India.
  77. Income of New Pension  System Trust.
  78. Income of a notified infrastructure debt fund.
  79. Income of Swachh Bharat Kosh.
  80. Income of Clean Ganga Fund.
  81. Partial withdrawal by an employee from his account under the scheme referred to in section 80CCD i.e. National Pension Scheme, in accordance with PFRDA regulations in this regard, up to 25% of the amount of contribution made by him with effect from 01.04.17.


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