Income Exempted under IT Act
Section 10 provide a list of income exempted under IT Act. List provides exemptions which are allowed to the salaried persons. The objective is to reduce to reduce the burden of taxing such as House Rent allowances, Children Education Allowance, Hostel Allowance, Gratuity, Leave Travel Allowances etc.
Section 10(1) – Agriculture Income
- As per the provisions of section 10(1), agricultural income earned by the taxpayer in India is exempt from tax.
- Any rent or revenue derived from land used for agricultural purposes or agricultural produce to sell in the market.
- Taxpayers can also avail the benefit of the income related to farm house on the subject to certain conditions.
Section 10(2) – Amount received by a member of the HUF from the income of the HUF
- As per provisions of section 10(2), amount received out of family income by any member of such HUF is exempt from tax.
Section 10(2a) – Share of profit from Partnership Firm
- As per section 10(2A), any partner receives share of profit from a firm is exempt from tax in the hands of the partner.
- Similarly, share of profit received by a partner of LLP from the LLP is also exempt from tax in the hands of such partner.
- However, such exemption is limited upto the share of profit in both the cases Firm or LLP.
Section 10(4) – Certain Interest to NRI
- Non – resident earning any income by way of interest on certain notified securities or bonds (such as income by way of premium on the redemption of such bonds) or NRE account in the hands of individual taxpayer, is exempt from tax.
Section 10(4)(ii) – Interest to Non-Resident External Account
- Non – resident individual earning any income by way of interest standing in Non-Resident (External) Account in any bank in India shall be exempt.
- However, this exemption shall not be available on or after 1-4-2005.
Section 10(5) – Leave Travel Concession (LTC)
- An employee (Indian as well as foreign citizens) can claim exemption on his leave travel.
- The employees are entitled to get exemption in respect of value of any travel concession or assistance received or due to the employee from his employer in connection with his proceeding on leave to any place in India.
- Exemption can be claimed for himself and family members.
Section 10(6) – Remuneration received by an individual who are working outside India
- As per section 10(6), the individuals who are working outside India. Such individuals include ambassadors or other officials of the Embassy, High Commission, Consulate Officer and trade commissioner or other official representatives in India of a foreign State
- The exemption shall be available in respect of Remuneration received by non-resident foreign citizen as an employee of a foreign enterprise for services rendered in India, if:
- Foreign enterprise is not engaged in any trade or business in India
- His stay in India does not exceed in aggregate a period of 90 days in such previous year
- Such remuneration is not liable to deducted from the income of employer chargeable under this Act
Section 10(7) – Perquisites and Allowances paid by Government to its Employees who are serving outside India
- All the perquisites and allowances paid by the Government to its employees for providing its services outside India are exempt from tax.
- However, this exemption is allowed only to the Government employees who are citizens of India.
Section 10(10CC)- Tax paid by the employer on perquisites
- Sometimes for non-monetary perquisites employer pay tax on behalf of employee in that case the tax so paid by the employer is treated as exempt in the hands of the employee.
Section 10(10d) – LIC Tax Exemption
- Any money received by the policyholder on the LIC money for any disease specified under section 80DDA is eligible for tax exemption.
- Any sum received under the policy of key man insurance.
- Any money received from the insurance company of a handicapped member under section 80DD.
Section 10(11)– Payment of Statutory Provident Fund
- Any payment received on statutory provident fund related to employer’s contribution, interest, amount received on termination from the company or firm will be exempted.
Section 10(10BC) – compensation for natural disaster
- The employees are entitled for the exemption from the central government on receiving the compensation for natural disaster.
Section 10(13A) – House Rent Allowance
The salaried persons are entitled to get exemption to receive the allowance on rent of the house. However, the exemption is allowed up to certain limit specified in Income Tax Rules as below:
Least of the following is exempt:
- Actual HRA Received by the assessee
- 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)
- Rent paid minus 10% of salary
Section 10(14) – Special allowances
The exemptions of special allowances are classified into two parts:
- Exemption of allowance under 10(14)(i)
- Exemption of allowance under 10(14)(ii)
Section 10(19) – Family pension received by family members of armed forces including paramilitary forces
- Family pension received by the widow or children or nominated heirs of a member of the armed forces (including paramilitary forces) where the death of such member has occurred in the course of operational duty is fully exempt.
Section 10(19A) – Income from one palace of a former ruler
- Annual value of any one palace or a portion of a palace in the occupation of a former ruler shall be exempted.
- It should be noted that in case such palace or a portion of a palace is let out , its income shall not be exempted.
How to get benefit of exempted income while filing Income tax return
To get more information about exempted income under Income Tax Act, 1961, write a email to email@example.com or send a text message or whatsapp to +91 9910000833.
- Income Tax Return filing click here
- For information about exempted income click here
- TDS Return filing click here