1.

Agricultural Income [Section 10(1)]

Agricultural income refers to income derived from land situated in India and used for
agricultural purposes, such as growing crops, fruits, or vegetables. This exemption is
provided because agriculture is a State subject, and the Central Government does not
impose income tax on it. However, agricultural income is considered for determining the tax
rate if the taxpayer also has non-agricultural income exceeding ₹2,50,000. For example, a
farmer earns ₹4,00,000 from selling rice grown on his farmland. This entire amount is
exempt from income tax.

2. Share of Profit from Partnership Firm [Section 10(2A)]

When a person is a partner in a partnership firm that pays tax on its income, the partner’s
share of profit from the firm is exempt in his individual hands. This prevents double taxation,
as the firm has already paid tax. However, remuneration or interest received by the partner
from the firm is taxable. For example, if a firm earns ₹10 lakh profit and a partner’s share is
₹2 lakh, this ₹2 lakh is exempt from the partner’s tax.

3. Income Received from HUF [Section 10(2)]

Members of a Hindu Undivided Family (HUF) may receive a share of income that has already
been taxed in the hands of the HUF. To avoid double taxation, such income is exempt for
individual members. For example, a HUF earns ₹5 lakh and distributes ₹1 lakh to each
member. The ₹1 lakh received by each member is exempt.

4. Gratuity [Section 10(10)]

Gratuity is a retirement benefit paid by an employer in recognition of long service. For

government employees, it is fully exempt. For private employees, gratuity is exempt up to
₹20,00,000 or the least of three amounts: (a) actual gratuity received, (b) ₹20,00,000, or (c)
15 days’ salary for each year of service. For example, a private-sector employee receives
₹18,00,000 as gratuity after 25 years of service; the entire amount is exempt.

5. Commuted Pension [Section 10(10A)]

When an employee chooses to receive a lump sum amount in place of a portion of his
pension, it is called commuted pension. For government employees, it is fully exempt. For
others, if gratuity is received, one-third of the pension is exempt; if no gratuity is received,
one-half is exempt. For example, a private teacher commuting half of her pension receives
₹3 lakh; if no gratuity is received, ₹1.5 lakh is exempt.

6. Leave Encashment [Section 10(10AA)]

Employees who retire often receive payment for earned but unused leave, known as leave
encashment. For government employees, it is fully exempt. For others, exemption is up to
₹3,00,000 or least of several prescribed limits. For example, a private company employee
receiving ₹2,50,000 for unused leave is fully exempt as it is within the limit.
7. Retrenchment Compensation [Section 10(10B)]

Retrenchment compensation is paid to workers when their services are terminated due to
downsizing or closure. The exemption is the least of: (a) actual amount received, (b)
₹5,00,000, or (c) the amount under the Industrial Disputes Act formula. For example, a
factory worker retrenched after 10 years receives ₹4,50,000; it is fully exempt.

8. Voluntary Retirement Compensation [Section 10(10C)]

Employees who choose to retire early under a Voluntary Retirement Scheme (VRS) receive
compensation. Such compensation is exempt up to ₹5,00,000, provided it is received only
once in a lifetime. For example, a bank employee opting for VRS and getting ₹4,80,000 will
not pay any tax on this amount.

9. Life Insurance Policy Proceeds [Section 10(10D)]

The amount received from a life insurance policy, including bonus, is exempt from tax.
However, exemption is allowed only if the annual premium does not exceed 10% of the sum
assured (or 20% for old policies). The exemption always applies if received on death. For
example, a person receives ₹5,00,000 on maturity of a LIC policy with premium ₹40,000 per
year — fully exempt.

10. Provident Fund Withdrawal [Section 10(11) & 10(12)]

Amounts received from a statutory or recognized provident fund, including employer and
employee contributions and interest, are exempt if the employee has rendered continuous
service for at least 5 years. For example, an employee withdrawing ₹8,00,000 from EPF after
7 years of service will not pay any tax.

11. Superannuation Fund [Section 10(13)]

A superannuation fund is a retirement benefit fund approved by the Income Tax

Department. Amounts received on retirement, death, or incapacity are fully exempt. For
example, a retired employee receives ₹3 lakh from an approved superannuation fund —
fully exempt.

12. House Rent Allowance (HRA) [Section 10(13A)]

HRA is paid to employees for meeting rent expenses. The exemption is the least of: (a) actual
HRA received, (b) rent paid minus 10% of salary, or (c) 40% (non-metro) / 50% (metro) of
salary. For example, a Delhi employee earning ₹50,000/month, paying ₹15,000 rent, receives
₹10,000 HRA — part of it is exempt as per rule.

13. Leave Travel Concession (LTC) [Section 10(5)]

LTC is provided by employers for employees to travel within India with family. The exemption
is limited to actual travel costs for the shortest route, twice in a four-year block. For example,
an employee reimbursed ₹25,000 for family train tickets to Kerala can claim full exemption
for the travel cost.

14. Scholarship [Section 10(16)]

Scholarships granted to meet education costs are fully exempt, whether from government or
private institutions. The purpose must be educational assistance. For example, a student
receiving ₹1,50,000 scholarship for postgraduate study abroad is not required to pay tax on
it.

15. Income of Minor Child [Section 10(32)]

When income of a minor child (like interest on savings) is clubbed with that of the parent,
the parent can claim exemption up to ₹1,500 per child for a maximum of two children. For
example, a minor earning ₹1,200 from bank interest — the full amount is exempt.

16. Sukanya Samriddhi Account Interest [Section 10(11A)]

The interest earned and maturity amount received under the Sukanya Samriddhi Yojana for
a girl child are fully exempt. This scheme promotes savings for girls’ education and marriage.
For example, a parent deposits ₹1 lakh annually; the ₹8,000 annual interest is exempt from
tax.

17. Income from Certain Tax-free Bonds [Section 10(15)]

Interest from specific bonds issued by government bodies such as NABARD, NHAI, or REC is
exempt. These are called tax-free bonds, generally issued for infrastructure projects. For
example, interest of ₹12,000 from NHAI tax-free bonds is fully exempt.

18. Income of Political Parties [Section 13A]

Registered political parties are exempt from income tax on their income from house
property, voluntary contributions, and capital gains, provided they maintain proper books of
accounts and audit reports. For example, a political party receiving ₹20 lakh donations used
for election campaigns will not be taxed if compliance is met.

19. Income of Charitable or Religious Trusts [Section 11 & 12]

Income applied for charitable or religious purposes by registered trusts is exempt, provided
at least 85% of income is used for approved objectives during the year. For example, a
charitable trust running a free school that spends its donations on educational activities
enjoys exemption.

20. Gifts from Relatives [Section 56(2)(x)]

Gifts in money or property received from relatives are fully exempt. Gifts from non-relatives
are exempt only up to ₹50,000 in a year. Gifts received on marriage or by inheritance are
also exempt. For example, a student receiving ₹1,00,000 from his father or ₹25,000 from a
friend is not taxable in either case (within limit).