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Chapter 3 discusses various types of incomes that are exempt from total income under the Income-tax Act, specifically sections 10 to 13A. Key exemptions include agricultural income, sums received from Hindu undivided families, shares of profit from partnerships, and certain allowances for non-residents and government employees. The chapter also outlines specific provisions for exemptions related to pensions, scholarships, and compensation received due to disasters.

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8 views6 pages

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Chapter 3 discusses various types of incomes that are exempt from total income under the Income-tax Act, specifically sections 10 to 13A. Key exemptions include agricultural income, sums received from Hindu undivided families, shares of profit from partnerships, and certain allowances for non-residents and government employees. The chapter also outlines specific provisions for exemptions related to pensions, scholarships, and compensation received due to disasters.

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Chapter 3 Incomes which do not form part of Total Income [Sections 10] All receipts, which give rise to income, are taxable under the Income-tax Act unless itis specifically provided that it does not form part of total income, Such incomes which do not form part of total income may also be called incomes exempt from tax. As per section 10 to 13A, certain incomes are either totally exempt from tax or exempt up toa certain amount, Therefore, these incomes, to the extent these are exempt, are not inchided in the total income of an assessee for cormputation of his total ‘There are many incomes which are exempt as per section 10. Some of the important incomes which are exempt from tax ‘under section 10 are discussed below: 3.1 Agricultural Income [Section 10(1)] Agricultural income is totally exempt, provided it falls within the definition of agricultural income given under section 2(1A). Agricultural income, though exempt, is to be aggregated in case of certain assesses for the purpose of determining the rte of tax on non-agricultural income. A detailed discussion is given in Chapter 12. 3.2 Sum received by a Member from HUF [Section 10(2)] ‘Any sum received by an individual, as a member of a Hindu undivided family, shall be exempt in the hands of the member. 3.3 Share of Profit of a Partner from a Firm [Section 10(2A)] In case of a person being a partner of a firm (which includes limited lability partnerships) his share in the total income of the firma shall be exempt from tax. 34 Interest on Non-resident (External) Account [Section 10(4)] In the case of an individual assessee any income by way of interest on money standing to his credit in a Non-Resident (Extemal) Account in any bank in India shal also be exempt if cerain conditions are satisfied, 35 Travel concession or assistance received by an individual from his employer [Section 10(5)]: Discussed in detail in Chapter on ‘Salaries’ 3.6 Remuneration to persons who are not citizens of India [Section 10(6)] In case of an individual who is not a citizen of India, the following income shall be exempt: (Remuneration received by diptomats, et. (i) Remuneration received by a foreign national as employee of a foreign enterprise (ii) Non-resident employed on a foreign ship (i) Remuneration of employee of foreign Goverament during his training in India 327 Allowances or perquisites outside India [Section 10(7)] Any allowances or perquisites paid or allowed, as such, outside India by the Goverament to a citizen of India, for rendering services outside India, are exempt. GRFARGBent gratuity received by an employee (Section 10(10)]: For detailed discussion see Chapter on 3.9 Payment in commutation of pension received by the employees [Section 10(10A)}: For detailed discussion see Chapter on ‘Salaries. 3.10 Leave Encashment [Section 10(10AA)}: For detailed discussion see Chapter on ‘Salar, 3.11 Compensation on(§@iRSHEHMIEB? [Section 10(10B)]: For detailed discussion see Chapter on ‘Salaries’, 3.12 Payments under Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 [Section 10(10BB)] Any payments made, under the above Act or any scheme made thereunder, shall be exempt in hands of the recipient. 3.13 Exemption for compensation received or receivable on account of any disaster [Section 10(10BC)] ‘Any amount received or receivable from the Central Goverament or a State Government of a local authority by an individual or his legal heir by way of compensation on account of any disaster shall be exempt. 36 Simplified Approach 10 Income Tax coup.3 @ r+ mean rei vet Sern 10400) For deed dein 0 area aE: a 1y employer [Section 10(10 Hi Se ceee ect “The income-tax actually paid by the employer himself on a non-monetary perquisite provided to the employee shall be exempt in the hands ar the employ’ 3.16 Amount received under 2 surance policy [Section 1010D)] i located by way of bonus on such policy, is wholly red under ie insurance paliey, including the sum allocated by way exempt fon ts However. the ellowing sum eeeived are not exempt onde his secon (1). any sum received from a policy under section 80DD(3) or section 80DDAG3); (2) any sum received under Insurance Policy; or (@2) any sum received, under an insurance policy issued on or after 2003 but on oF before 31.3.2012 in respect of Jhich the premium payable for any of the years during the terms of the policy exceeds 20% of the actual capital sum assured. However, such sum received on the death of a person shall be exempt; or : © 2 sun received under an insurance policy issued on or after 1.4.2012 in respect of which the premium payable for any of the years during the terms of the policy exceeds 10% of act co 1 capital sum assumed; or any sum received under an insurance policy issued on or after 1.4.2013 for insurance on the life of any person, who is (®) aperson with disability or a person with severe disability as referred to in section 80U; or Gi) suffering from disease or ailment as specified in the rules made under section 80DDB in respect of which the premium payable for any of the years during the terms of policy exceeds 15% of the actual . Exempt 1s. 1 Hee F Taxable 16. a re u. Taxable 17. T 7. : c . Exempt

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