Some common Incomes which are not taxable [Exempt] as per Section 10 of Indian Income Tax Act

SECTION 10 OF INCOME TAX - COMMON INCOME WHICH ARE EXEMPT FROM INCOME TAX

Section 10 of the Indian Income Tax Act lists or details various incomes /receipts that are not taxable under the Act and hence no income tax is payable in receipt or accrual of these incomes.

Here we take a look at some common types of those incomes without getting into the complex and specific details.

1.Agriculture income

2.Any income received by the member of the HUF out of the income of that HUF

3.Any Income received by the partner of any partnership firm as a share of his/her profit (the same is already taxed in the hands of the partnership firm)

4.Any Interest earned by a Non-resident in an account maintained under Non-resident (External) Account in any bank in India.

5.Any Leave travel concessions received by an employee from the employer for himself and his/her family subject to such conditions which are prescribed.

6.Any death-cum gratuity received by a Govt. employee and also for the employees who are covered under the Payment of Gratuity Act,1972. The method of calculation of gratuity and the max. amount that is allowed for exemption is as prescribed in the respective act and also as prescribed in the Income Tax Act.

7.Any commuted pension received by Govt. and other employees is subject to the ceiling provided under the Act.

8.Any payment of leave salary received by Govt. Employee at the time of retirement or superannuation. In the case of other employees, the ceiling limit of exemption is as provided in the Acts and rules made on this behalf.

9.Any amount received by an employee on his voluntary retirement or termination under a scheme of voluntary retirement is subject to a maximum ceiling limit of Rs.5 lakhs.

10.Any sum received under the Life insurance policy including the vested bonus under those policies. However there are some exceptions provided in Section 10(10D) wherein the sum received under insurance policies will be taxable such as keyman policies, policies, where the premium paid, exceeds 15% & 10% of the sum assured etc.

11.Any payment received from the provident fund by any employee. However from 1st Feb. 2021, if the amount of contribution in a year is exceeding Rs.2.5 lakhs, the interest on the contribution above 2.5 lakhs is taxable.

12.Any payment received from Sukanya Samriddhi Account under Post Office.

13.Any payment received under National Pension Trust to any employee at the time of closure of account or opting out to the extent of 60% of the total sum.

14.Any payment received under National Pension Trust to any employee at the time of partial withdrawal from the account to the extent of 25% of the total sum.

15.Any scholarships granted to meet the cost of education.

16.Any income by way of daily allowance or constituency allowance by a Member of Parliament or State legislature.

17.Any cash or kind received by way of award or reward under the scheme of Union or State government.

18.Any income of the Panchayat, Municipality, Municipal committee or cantonment board.

19.Any income of the research association which is approved under section 35.

20. In respect of clubbing of income of minor child u/s 64, exemption of income is available up to Rs.1500 per child.

21.Any income of shareholders on account of the buyback of shares

22.Capital gains on the transfer of any agricultural land are subject to some conditions mentioned in Section 2 such as distance from the municipality, cantonment board etc.

Disclaimer : The above lists only some common incomes which are exempt from tax. There are numerous other incomes for different categories of taxpayers which are also exempt under different situations and conditions. Please refer to Section 10 of the Indian Income Tax,1961 for complete and exhaustive details.