1.
Provide a list of ten incomes exempt from tax in Section 10 of
the Income Tax Act.
Answer:
Agricultural Income (Section 10(1)): Income derived from agricultural land in India is
exempt from tax.
Share of Profit from a Partnership Firm (Section 10(2A)): The share of profit received
by a partner from a partnership firm that is assessed as a separate entity is exempt.
Allowances to Members of Parliament (MPs) (Section 10(17)): Any allowance or
perquisites received by an MP or MLA is exempt.
Gratuity (Section 10(10)): Gratuity received by an employee upon retirement or
termination, up to specified limits, is exempt.
Leave Travel Allowance (LTA) (Section 10(5)): LTA received for travel expenses
incurred by employees within India, subject to conditions and limits, is exempt.
House Rent Allowance (HRA) (Section 10(13A)): HRA received by an employee is
exempt, subject to certain conditions.
Education Scholarships (Section 10(16)): Any scholarship granted to meet the cost of
education is fully exempt from tax.
Provident Fund Amount (Section 10(11), 10(12)): Accumulated balance received by an
employee from a recognized provident fund is exempt, subject to conditions.
Life Insurance Receipts (Section 10(10D)): Any sum received from a life insurance
policy, including bonus, is exempt, with some exceptions.
Income of a Minor Child (Section 10(32)): A parent can claim an exemption of up to
₹1,500 per child for income earned by a minor child that is clubbed with their income.
2. Explain any two deductions of your choice from 80C to 80U.
Answer:
1. Section 80C: Deductions on Investments
Overview: Section 80C is one of the most commonly used deductions, allowing
taxpayers to reduce their taxable income by investing or spending in specified
avenues.
Limit: The maximum deduction allowed under Section 80C is ₹1,50,000 in a
financial year.
Eligible Investments and Expenses:
o Employee Provident Fund (EPF) and Public Provident Fund (PPF)
o Life Insurance Premiums paid for self, spouse, or children
o Fixed Deposits (FDs) with a lock-in period of 5 years
o Equity Linked Savings Schemes (ELSS), which are tax-saving mutual funds
o Principal Repayment on Home Loan
o Tuition Fees for children’s education (up to 2 children)
Benefit: By using Section 80C, taxpayers can save a significant amount in taxes by
either investing in certain financial products or incurring specific expenses.
2. Section 80D: Deductions for Health Insurance Premiums
Overview: Section 80D offers deductions for premiums paid towards health insurance
for self, family, and dependent parents, as well as for preventive health check-ups.
Limit:
o For self, spouse, and dependent children: Deduction up to ₹25,000.
o For parents (if they are below 60 years): Additional deduction up to ₹25,000.
o For parents aged 60 or above: Deduction goes up to ₹50,000.
o If both taxpayer and parents are aged 60 or above, the total deduction can be
up to ₹1,00,000.
Additional Deduction: ₹5,000 for preventive health check-ups within the above
overall limits.
Benefit: Section 80D encourages individuals to secure their health by allowing tax
benefits on health insurance premiums, easing the financial burden of medical
expenses.
These deductions under Sections 80C and 80D provide substantial relief, helping individuals
plan for future needs like retirement, health, and family welfare, while saving on taxes.
