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Exempted Income

The document outlines various types of income that are exempt from tax under the Income-tax Act, 1961, specifically focusing on Sections 10, 11, and 13A. Key exemptions include agricultural income, HUF income, partner's share in firms, and various allowances for government employees, among others. Each exemption has specific conditions that must be met to qualify for tax exclusion.

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21 views2 pages

Exempted Income

The document outlines various types of income that are exempt from tax under the Income-tax Act, 1961, specifically focusing on Sections 10, 11, and 13A. Key exemptions include agricultural income, HUF income, partner's share in firms, and various allowances for government employees, among others. Each exemption has specific conditions that must be met to qualify for tax exclusion.

Uploaded by

neeraj.poddar
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Income Exempt from Tax

Concept
Certain incomes are expressly excluded from the scope of “total income” under the Income-tax
Act, 1961. These are governed mainly by Sections 10, 11, 13A, and related provisions.
Exempt income means:

 Fully excluded from taxable income, and


 Not subject to tax if prescribed conditions are met.

📌 Key Exemptions under Section 10


Sec Nature of Income Key Conditions
Income derived from agricultural land in India;
integrated for rate purposes if other income >
10(1) Agricultural Income
basic exemption limit.
Share of income received by a member from
10(2) HUF Income
HUF is fully exempt.
Share of profit is exempt as firm pays
10(2A) Partner’s Share in Firm/LLP Profit
tax separately. Interest/salary are
taxable.
10(4) Interest on NRE Account Exempt for NRIs, subject to RBI conditions.
Twice in a block of four years; conditions under
10(5) Leave Travel Concession (LTC)
Rule 2B must be satisfied.
10(6) Remuneration to Foreign Fully exempt if conditions met.
Diplomats
Allowances to Govt. Employees
10(7) E.g., Indian diplomats posted overseas.
Abroad
Sec Nature of Income Key Conditions
Fully exempt for Govt. employees; up to limits
10(10) Gratuity for others under Payment of Gratuity Act or
specified ceiling.
Fully exempt for Govt. employees; partly
10(10A) Commuted Pension
exempt for non-Govt. employees.
Voluntary Exempt up to ₹5 lakh if conditions of Rule 2BA
10(10C)
Retirement met.
Compensation
Fully exempt if premium ≤10% (or 20%) of
sum assured. High-value ULIPs (issued post
10(10D) Life Insurance Maturity
1.4.2023) partly taxable.
10(11) Statutory Provident Fund, PPF Entire amount on withdrawal exempt.
Exempt within limits. Excess employer
10(12) Recognized Provident Fund
contribution taxable.
10(13A) House Rent Allowance (HRA) Exempt up to specified limits under Rule 2A.
Allowances to meet specific expenses wholly,
10(14) Special Allowances
necessarily, exclusively for duty.
10(15) Interest on Certain Securities Notified savings certificates, bonds, etc.
Scholarships to meet cost of education are fully
10(16) Scholarships
exempt.
10(17) MPs/MLAs Allowances Certain specified allowances.
10(18) Gallantry Awards Pension or family pension received by
awardees.
Educational/Medical/Charitable Income of notified institutions subject to
10(23C)
Institutions conditions.
Income derived by members of Scheduled
10(26) Specified Scheduled Tribes
Tribes in specified areas.

Other Exemptions

 Section 11: Income of charitable/religious trusts.


 Section 13A: Income of political parties (subject to conditions).

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