Income Exempt

Income Exempt from Tax ❘ Agricultural income ( U/S 10(1) ) ❙ Agriculture income means any income derived from land which is used for agriculture purpose and which is assessed to land Revenue in India.

Agricultural Income (10 (1) ❘ Such income must satisfy the following three conditions: ❚ Rent or revenue should be derived from land. ❚ The land must be used for agriculture purposes. ❚ The land should be situated in India. ❚ It is exempt from the tax but it is included in the total income to determined the rate of tax at which the total without agriculture income would be liable to tax.

2. Re ceipt from H UF (U /S 10( 2) ❚ Any sum received by an individual as a member of HUF out of the estate of income of the family is exempt from tax and not included in the total income of the individual. ❚ The logic behind this is that HUF is already taxed on this income and hence no tax should be levied on distribution of the income of HUF.

3.

Pa rtner’ s share in the prof it of th e firm: [ U/S 10( 2A) ] ❚ In case of a person who is a partner of a firm which is separately assessed in that case the amount of this share in the profits of the firm ascertain as per the partnership deed is exempted from tax.

4. In te rest 10(4)

to non- resident [ U/S

❚ Interest on Bonds issued by Government ❚ Interest on FCNR Deposits ❚ Interest on NRE Deposits ❚ 5.Interest on specified savings certificates received by NonResident Indian Citizens [U/S 10(4B)

6. Leave Tra vel Concess ion [ U/ S 10( 5) ❘ The Value of leave travel concession received or due to an individual is exempted to the extent it is actually spent. ❘ Thus, the exemption is available to any individual in respect of the value of any travel concession or assistance received by or due to him, • From his employer for himself and his family, in connection with his proceeding on leave to any place in India. • From his employer or former employer for him self and his family, in connection with his proceeding to any place in India after retirement service or After the termination of service.

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

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

8

Remuneration received by foreign nation as an employee of foreign Enterprise [ U/S 10(6) (vi) ] .

❚ In case of an individual who is not a citizen of india, the exemption from tax is available under this section in respect of the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India

9 .Sal ary

of Non- Res ident Em pl oy ee of

a Forei gn shi p [U/S 10( 6) ❚ The Sub-clause (vii) of section 10(6) gives the exemption from tax in case of an individual who is not a citizen of India and non-resident, in respect of income chargeable under the head Salaries received by him for service rendered in connection with his employment on a foreign ship. However, his total stay in India should not exceed in aggregate a period of ninety days in the previous years.

10. Remuner ation of t rainee of a for Gover nment [U /S 10 (6) (xi) ]

eign

❚ As per clause (xi) of sub-section (6) of section 10, the exemption is available to an individual who is not a citizen of India in respect of the remuneration received by him an employee of the government of a foreign state during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by: ❚ a) The Government

11. Tax pai d on certai n other i ncom e of Non- Resi dent[ U/ S 10( 6B )]

❚ Incase of Non-resident or foreign company deriving income other than salary, or Fees for technical services from Government or an Indian concern in pursuance of an agreement entered into before 1st june,2002by the Central Government with the Government of Foreign state or international organization and the tax on such income is payable by the Government or Indian concern to the Central Government under the terms that agreement approved before 1st June,2002 by the Central Government in that case the tax so paid is exempt from tax.

Fo reig n Allo wanc es an d p er quis ites to G ov er nme nt Em pl oye es o utsi de In di a [U /S 10 (7 ) ]

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

13. Income of an employee of a foreign Government under Cooperative technical Assistance programme [U/S 10(8)]

❚ In the case of an individual who is assigned to duties in India in connection with any cooperative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State( the terms whereof provide for the exemption given by this clause) the following incomes will be exempted from tax

❚ 14.Income of a consultant under a technical assistant grant Agreement Between the international organization and the Government of foreign state [U/S 10(8A)] ❚ 15.Income of an Individual who is assigned to duties in India in connection with any technical assistance agreement entered and project in accordance with an agreement entered into by the central Government and the Agency: [U/S10(8B)]. ❚ 16.Payment under the Bhopal Gas Leak Disaster(processing of claims) Act, 1985: [U/S 10(10BB)].

employee of a public sector company [U/S 10(10C)]

❚ At the time of his voluntary retirement or termination of his service in accordance with any scheme of voluntary retirement or in case of public sector company referred to in point (a) above, a scheme of voluntary separation, shall be exempted to the extent such amount does not exceeds five rupees, shall be exempted to the extent such amount does not exceeds five lakh rupees

18. Tax borne by the employer on Non –monetary perquisite provided to employee [U/S 10(10ccc)]

❚ Any amount of tax borne by the employer on the non monetary perquisites provided to the employee shall be exempt u/s 10(10cc). Thus the tax obligation of the employee towards non-monetary perquisite (i.e. perquisite in kind ) given by the employer, will not be treated as perquisite u/s 17(2).

❚ 19.Amount received in life insurance policy:[U/S 10(10)] ❚ Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy shall be totally exempt from tax. ❚ 20. Payment from provident fund[ U/S 10(11) ❚ Any payment from a provident fund to which the provident funds Act, 1925, applies or from any other provident fund set up by the central Government and notified in the official gazette (i.e. public provident fund)is totally exempted from tax.

❚ 21.Accumulated balance from a recognized provident fund[u/s 10(12)] ❚ The accumulated balance due and becoming payable to an employee participating a recognized provident fund, to the extent provided in rule 8 of part A of schedule, is exempted from tax. ❚ 22. Payment from an approved superannuating fund [ U/S 10(13)]

❚ 23. House rent allowance [U/S 10(13A)]

❚ 24.Special Allowance for expenses[ U/S 10(14)] ❚ 25. Certain income by way of interest etc. exempted from tax[U/S 10(15). ❚ Certain income by way of interest, premium etc from certain securities certificate, bonds, deposite etc. as specified under this section is

❚ 26. Scholarship [ U/S 10(16)] ❚ Scholarship granted to meet the cost of education is totally exempt from tax and will not be included in the computation of income. ❚ 27.Allowances received by the member of parliament or state legislature[U/S 10(17)

❚ 28. Awards[U/S 10(17A)] ❚ Awards received , whether in cash or kind, as stated below shall be exempted from tax as per sub section 17A of section 10 ❚ 29. Family pension received by the family member of armed forces[ U/S 10(19)] ❚ Family pension received by the widow or children or nominated heirs, of a member of armed forces including parliament forces of the union , where the said member dies in the course of operation duties shall be exempted from tax. ❚ 30. Annual value of one place of a ruler[ U/S 10(19A)]