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Exempt Income FAQs
Comprehensive Online Exempt Income FAQs u/s 10 in India. Brief, yet considers all aspects of Exempt Income, exempt interest, exempt salary, agriculture income, including section 10.
Exempt income refers to income which though is earned and received during the financial year is not taxable.
It means that at the time of calculating annual income, this type of income will not be added. For claiming any of these exemptions, it is necessary to furnish documents which shows that your income comes under exemption list.
| Section | Nature Of Income | Exemption limit, if any |
| 10(1) | 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(10BC) | Compensation receipt on account of any disaster | There are no restrictions on the amount, but the Central, State, or Local Government must compensate. Floods (river, ocean, lake), cyclones, landslides, hill rock collapses, earthquakes, droughts, fires, and human-caused disasters like oil leaks and industrial mishaps fall under the category of "disaster" and cause enormous damage and loss. |
| 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 |
| 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 Refer how Olympic Medal Winners awards, rewards are taxed in India? | |
| 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 | |
| 10(30) | (i) Subsidy from Tea Board under approved scheme of re-plantation | |
| 10(31) | (ii) Subsidy from concerned Board under approved Scheme of re-plantation | |
| 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 |
| Section | Nature Of Income | Exemption limit, if any |
| 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 |
- By investing in capital gain bonds
- By reinvesting in residential properties.
- Registration charges
- Brokerage expenses
- Cost of improvements
| Section | Nature Of Income | Exemption limit, if any |
| 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 form of tax paid by employer for a period up to 48 months |
| 10(7) | Allowances and perquisites by the government to citizens of India for services abroad | Winnings from races Rs.2500/- other receipts Rs.5000/- |
| 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 | up to 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) | up to one-half months’ salary for each year of completed service. | |
| 10(10A) | 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/- whichever is less | |
| 10(10B) | Retrenchment compensation | Only on income arising in those areas or interest on securities or dividends |
| 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 u/s. 25F(b) of Industrial Dispute Act 1947 or the amount notified by the government, whichever is less. |
| 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) | Minor's income clubbed with individual | Upto Rs. 1,500/- |
| 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 |
- Any rent received from land which is used for agricultural purpose.
- Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent in kind so as to render it fit for the market, or sale of such produce.
- Income attributable to a farm house subject to the condition that building is situated on or in the immediate vicinity of the land and is used as a dwelling house, store house etc.
Now income earned from carrying nursery operations is also considered as agricultural income and hence exempt from income tax.
In order to consider an income as agricultural income certain points have to be kept in mind:
- There must be a land.
- The land is being used for agricultural operations.
- Agricultural operation means that efforts have been induced for the crop to sprout out of the land.
- If any rent is being received from the land then in order to assess that rental income as agricultural income there must be agricultural activities on the land.
- In order to assess income of farm house as agricultural income the farm house building must be situated on the land itself only and is used as a store house/dwelling house.
- Income from sale of replanted trees.
- Rent received for agricultural land.
- Income from growing flowers and creepers.
- Share of profit of a partner from a firm engaged in agricultural operations.
- Interest on capital received by a partner from a firm engaged in agricultural operations.
- Income derived from sale of seeds.