Income Exempt from TaxIncome Exempt from Tax

•Agricultural income ( U/S 10(1) )Agricultural income ( U/S 10(1) )

– Agriculture income means any Agriculture income means any income derived from land which is income derived from land which is used for agriculture purpose and used for agriculture purpose and which is assessed to land Revenue in which is assessed to land Revenue in India. India.

Agricultural Income (10 (1)Agricultural Income (10 (1)

• Such income must satisfy the following Such income must satisfy the following three conditions:three conditions:

• Rent or revenue should be derived from land.Rent or revenue should be derived from land.• The land must be used for agriculture The land must be used for agriculture

purposes.purposes.• The land should be situated in India.The land should be situated in India.

• It is exempt from the tax but it is included in It is exempt from the tax but it is included in the total income to determined the rate of tax the total income to determined the rate of tax at which the total without agriculture income at which the total without agriculture income would be liable to tax.would be liable to tax.

2. Receipt from HUF (U/S 10(2)2. Receipt from HUF (U/S 10(2)

• Any sum received by an individual as a Any sum received by an individual as a member of HUF out of the estate of member of HUF out of the estate of income of the family is exempt from tax income of the family is exempt from tax and not included in the total income of and not included in the total income of the individual. the individual.

• The logic behind this is that HUF is The logic behind this is that HUF is already taxed on this income and hence already taxed on this income and hence no tax should be levied on distribution of no tax should be levied on distribution of the income of HUF.the income of HUF.

3. 3. Partner’s share in the Partner’s share in the profit of the firm: [U/S profit of the firm: [U/S 10(2A)]10(2A)]

• In case of a person who is a partner In case of a person who is a partner of a firm which is separately of a firm which is separately assessed in that case the amount assessed in that case the amount of this share in the profits of the of this share in the profits of the firm ascertain as per the firm ascertain as per the partnership deed is exempted from partnership deed is exempted from tax.tax.

4.4.Interest to non- resident [ U/S Interest to non- resident [ U/S 10(4)10(4)

• Interest on Bonds issued by GovernmentInterest on Bonds issued by Government• Interest on FCNR DepositsInterest on FCNR Deposits• Interest on NRE DepositsInterest on NRE Deposits

• 5.5.Interest on specified savings Interest on specified savings certificates received by Non- certificates received by Non- Resident Indian Citizens [U/S 10(4B)Resident Indian Citizens [U/S 10(4B)

6.6.Leave Travel Concession Leave Travel Concession [ U/S 10(5)[ U/S 10(5)

• The Value of leave travel concession received or The Value of leave travel concession received or due to an individual is exempted to the extent it is due to an individual is exempted to the extent it is actually spent.actually spent.

• Thus, the exemption is available to any individual Thus, the exemption is available to any individual in respect of the value of any travel concession or in respect of the value of any travel concession or assistance received by or due to him,assistance received by or due to him,

– From his employer for himself and his family, in From his employer for himself and his family, in connection with his proceeding on leave to any connection with his proceeding on leave to any place in India.place in India.

– From his employer or former employer for him self From his employer or former employer for him self and his family, in connection with his proceeding to and his family, in connection with his proceeding to any place in India after retirement service or After any place in India after retirement service or After the termination of service.the termination of service.

7. 7. Remuneration received by foreign Remuneration received by foreign Diplomat [U/S 10(6)(ii)]Diplomat [U/S 10(6)(ii)]

• The exemption from tax is available in the case The exemption from tax is available in the case of an individual who is not a citizen of India in of an individual who is not a citizen of India in respect of the remuneration received by him as respect of the remuneration received by him as an official by whatever name called, of an an official by whatever name called, of an embassy, high commission, legation, embassy, high commission, legation, commission, consulate or the trade commission, consulate or the trade representations of a foreign state, or as a representations of a foreign state, or as a member of the staff of any of these officials, for member of the staff of any of these officials, for service in such capacity.service in such capacity.

• The exemption is given only to those officials of The exemption is given only to those officials of foreign country in which corresponding Indian foreign country in which corresponding Indian officials enjoy a similar exemption.officials enjoy a similar exemption.

Foreign Allowances and perquisites to Government Foreign Allowances and perquisites to Government Employees outside India [U/S 10(7) ]Employees outside India [U/S 10(7) ]

• Sub-section (7) of section 10 states Sub-section (7) of section 10 states that any allowance or perquisites that any allowance or perquisites paid or allowed as such out side paid or allowed as such out side India by the Government to a India by the Government to a citizen of India for rendering citizen of India for rendering services outside India will be totally services outside India will be totally exempted from tax.exempted from tax.

LIC/PF ExemptionsLIC/PF Exemptions

• 8.Amount received in life insurance policy:[U/S 8.Amount received in life insurance policy:[U/S 10(10D)]10(10D)]

• Any sum received under a life insurance policy, including Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy shall the sum allocated by way of bonus on such policy shall be totally exempt from tax.be totally exempt from tax.

• 9. Payment from provident fund[ U/S 10(11)9. Payment from provident fund[ U/S 10(11)• Any payment from a provident fund to which the Any payment from a provident fund to which the

provident funds Act, 1925, applies or from any other provident funds Act, 1925, applies or from any other provident fund set up by the central Government and provident fund set up by the central Government and notified in the official gazette (i.e. public provident notified in the official gazette (i.e. public provident fund)is totally exempted from tax.fund)is totally exempted from tax.

RPFRPF

• 10.Accumulated balance from a 10.Accumulated balance from a recognized provident fund[u/s 10(12)]recognized provident fund[u/s 10(12)]

• The accumulated balance due and becoming The accumulated balance due and becoming payable to an employee participating a payable to an employee participating a recognized provident fund, to the extent recognized provident fund, to the extent provided in rule 8 of part A of schedule, is provided in rule 8 of part A of schedule, is exempted from tax.exempted from tax.

• 11. Payment from an approved 11. Payment from an approved superannuating fund [ U/S 10(13)]superannuating fund [ U/S 10(13)]

InterestInterest

• 12. Certain income by way of 12. Certain income by way of interest etc. exempted from tax[U/S interest etc. exempted from tax[U/S 10(15).10(15).

• Certain income by way of interest, Certain income by way of interest, premium etc from certain securities premium etc from certain securities certificate, bonds, deposit etc. as certificate, bonds, deposit etc. as specified under this section is exempted specified under this section is exempted from tax.from tax.

Scholarship/ MP AllowanceScholarship/ MP Allowance

• 13. Scholarship [ U/S 10(16)]13. Scholarship [ U/S 10(16)]• Scholarship granted to meet the Scholarship granted to meet the

cost of education is totally exempt from cost of education is totally exempt from tax and will not be included in the tax and will not be included in the computation of income.computation of income.

• 14.Allowances received by the 14.Allowances received by the member of parliament or state member of parliament or state legislature[U/S 10(17)legislature[U/S 10(17)

AwardsAwards• 15. Awards[U/S 10(17A)]15. Awards[U/S 10(17A)]• Awards received , whether in cash or kind, as stated Awards received , whether in cash or kind, as stated

below shall be exempted from tax as per sub section 17A of below shall be exempted from tax as per sub section 17A of section 10section 10

• 16. Family pension received by the family member of 16. Family pension received by the family member of armed forces[ U/S 10(19)]armed forces[ U/S 10(19)]

• Family pension received by the widow or children or Family pension received by the widow or children or nominated heirs, of a member of armed forces including nominated heirs, of a member of armed forces including parliament forces of the union , where the said member dies parliament forces of the union , where the said member dies in the course of operation duties shall be exempted from tax.in the course of operation duties shall be exempted from tax.

• 17. Annual value of one palace of a ruler[ U/S 10(19A)]17. Annual value of one palace of a ruler[ U/S 10(19A)]

18.18. Pension received by a person , Honored Pension received by a person , Honored by a Gallantry Award U/S 10(18)]by a Gallantry Award U/S 10(18)]

• This clause provides exemption for This clause provides exemption for any income by way of :-any income by way of :-

• a)a)        Pension received by an individual who Pension received by an individual who has been in service of central or state has been in service of central or state Gov. and has been awarded,”Parama Vir Gov. and has been awarded,”Parama Vir Chakra)””Maha Vir Chakra” or Vir ChakraChakra)””Maha Vir Chakra” or Vir Chakra

• b)b)        Family pension received by any Family pension received by any member of the family in case of death of member of the family in case of death of the awards.the awards.

•

19. Clubbed Income of 19. Clubbed Income of a Minor Child {U/S a Minor Child {U/S 10[32]}10[32]}

• In case of the income of a minor In case of the income of a minor child clubbed with that of the child clubbed with that of the parent U/S 64(1A), such income is parent U/S 64(1A), such income is exempted from tax upto Rs. 1500/- exempted from tax upto Rs. 1500/- in respect of each minor child in respect of each minor child whose income is clubbed.whose income is clubbed.

20. Income arising from Transfer of 20. Income arising from Transfer of Units of Units, 1964 {U/S 10(33)}Units of Units, 1964 {U/S 10(33)}

• Any income arising from transfer of Any income arising from transfer of capital asset being a unit of Unit capital asset being a unit of Unit Scheme, 1964 and where the Scheme, 1964 and where the transfer of such an asset takes transfer of such an asset takes place on or after 1place on or after 1stst April 2002, it April 2002, it shall be exempt from taxshall be exempt from tax

21. Income by way of Dividend 21. Income by way of Dividend {U/S 10(34)}{U/S 10(34)}

• Income by way of dividend as referred in Income by way of dividend as referred in section 115-0 is exempted from tax in the section 115-0 is exempted from tax in the hands of the shareholders. Section 115-0 hands of the shareholders. Section 115-0 provides that every domestic company provides that every domestic company declaring dividend (including interim declaring dividend (including interim dividend) shall pay the tax on dividend. dividend) shall pay the tax on dividend. In view of this, tax being levied on a In view of this, tax being levied on a company on distributed profits, the company on distributed profits, the dividend income in the hands of the dividend income in the hands of the shareholders will now be exempt from tax shareholders will now be exempt from tax u/s 10(34).u/s 10(34).

• 22. Income from Mutual Fund 22. Income from Mutual Fund etc. {U/S 10(35)}etc. {U/S 10(35)}

•   

• 23 Capital Gain on compensation 23 Capital Gain on compensation received on compulsory acquisition received on compulsory acquisition of Agricultural Land in certain urban of Agricultural Land in certain urban Areas {U/S 10(37)}Areas {U/S 10(37)}

•   • 24. Long Term capital gains or 24. Long Term capital gains or

Transfer of Equity Shares in a Transfer of Equity Shares in a Company or Units of an Equity Company or Units of an Equity oriented fund {u/S 10(38)}oriented fund {u/S 10(38)}