Income Exempt

Income Exempt from Tax • Agricultural in come ( 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. Partn er’s pr ofit o f th e 10(2A)]

share in the fir m: [ U/S

• 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 terest to non- r esident [ U/S 10(4) • Interest on Bonds issued by Government • Interest on FCNR Deposits • Interest on NRE Deposits • 5. In tere st o n s pecifi ed savin gs cert ific ates received by No nResid ent I ndian Citize ns [U /S 10(4B)

6. Leave Concess

Tra vel 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.

9 . Sa la ry o f No n-Resid ent

Emp loyee of a F oreign ship [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.

11. Tax p aid on c ert ain o th er in come o f No n-R esid ent[ 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,2002 by 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.

Fore ig n Allow Gover nment E ]

ances and per qui sit es to mploy ee s out si de India [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.

Other Exemptions • 14. Income of a consultant under a t echnic al assis tant gr ant Agr eemen t Between t he inte rnational or ganiz at ion and the Gover nm ent of for eign s tate [U /S 10(8A) ] • 15.Income of an I ndividual who is ass igned t o duti es in In di a in c on nect ion w it h any techn ical assistance agr eemen t enter ed and proj ec t in accordance with an agr eemen t enter ed into by the cent ral G ov er nment and the Agency : [U/ S10(8B )]. • 16.P ayment under the Bhopal G as Leak Disaster (processing of claims) Act, 1985: [U /S 10(10BB)] .

17. Compensation on retirement of an employee [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(10cc)] • 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).

LIC/PF Exemptions • 19.Amount r eceived 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. P ayment fr om pr ovident 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.

RPF/ HRA etc • 21. Accum ulat ed balance from a recogni zed pr ov ident 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. P ay ment from an approved superannuati ng fund [ U /S 10( 13) ]

• 23. House ren t al lowance [U/S 10(1 3A) ]

Special Allowance • 24.Specia l All owa nce fo r expenses[ U/S 10(1 4)] • 25. C erta in i ncome by wa y o f in te re st etc . e xempted fro m tax[U/ S 1 0(1 5). • Certain income by way of interest, premium etc from certain securities certificate, bonds, deposit etc. as specified under this section is exempted from tax.

Scholarship/ MP Allowance • 26. Sc holars hip [ U/S 1 0(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.All owa nces r eceiv ed by the member o f p arlia ment or s ta te le gisla ture[U/ S 1 0(1 7)

Awards • 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 pensi on received by t he family member of ar med 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 palace of 10(19A) ]

a r uler[ U/ S

31. Pension received by a per son , Honored by a Gal lant ry Awar d U /S 10( 18) ]

•

This clause provides exemption for any income by way of :• a) Pension received by an individual who has been in service of central or state Gov. and has been awarded,”Parama Vir Chakra)””Maha Vir Chakra” or Vir Chakra • b) Family pension received by any member of the family in case of death of the awardee. •

• 32. In com e o f membe r of Schedul ed Tr ibe [U/S 10{ 26} ] •  • 33 Income of a Resi dent of Ladakh Di st ri ct {U/S 10[ 26A] }

34. Clubbed I ncome of a Minor Ch ild {U /S 10[32]} • In case of the income of a minor child clubbed with that of the parent U/S 64(1A), such income is exempted from tax upto Rs. 1500/- in respect of each minor child whose income is clubbed.

35. In come a rising fro m Transfe r of Un its o f Un it s, 1 964 {U /S 10(33)}

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

36. In come b y wa y o f D ivid end {U /S 1 0(3 4)} • Income by way of dividend as referred in section 115-0 is exempted from tax in the hands of the shareholders. Section 115-0 provides that every domestic company declaring dividend (including interim dividend) shall pay the tax on dividend. In view of this, tax being levied on a company on distributed profits, the dividend income in the hands of the shareholders will now be exempt from tax u/s 10(34).

• 37. In com e f rom Mutual Fund etc. {U/S 10( 35)} •  • 38. In com e f rom Transf er of Long Term Capital Asset bei ng Equity Shares {U/S 10( 36) }

• 39. C apita l Ga in o n comp ensatio n r eceiv ed o n comp ulsory a cquisit ion of Agric ultu ral Land i n c ertain urban A reas {U /S 10(3 7)} •   • 40. L ong T erm c apita l g ain s or Tra nsfe r o f Eq uity Shares i n a Company o r Units o f an Equity oriented f und {u /S 10(3 8)}