EXEMPTED INCOMES

EXEMPTED INCOMES

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  CHETHAN.S Department of Management,AIGS 1 1 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 INCOME TAX-I CHAPTER-2: EXEMPTED INCOMES INTRODUCTION Based on the nature of income earned by the assessee (i.e., whether revenue or capital), the next step in the process of making assessment is to identify whether the incomes are taxable or exempt. The taxability of an income is ascertained with the help of the Golden Rule of Income Tax, which states that- “ALL REVENUE RECEIPTS ARE TAXABLE UNLESS SPECIFICALLY EXEMPT” AND “ALL CAPITAL RECEIPTS ARE EXEMPT UNLESS SPECIFICALLY TAXABLE” EXEMPT INCOME Income that is non-taxable is called as exempt income. Under Section 10, there are different sub-sections that define what kind of income is exempt from tax. This can range from agricultural to house rent allowance. Any income that an individual acquires or earns during the course of a financial year that is deemed to be non-taxable is referred to as 'Exempt Income'. As per the Income Tax Act, there are specific kinds of income that are exempt from tax as long as these types of income fulfil the guidelines and provisions outlined in the Act. Exempt income comes in many forms such as the interest received through agricultural means, interest received through PPF, long term capital gains earned through shares and stocks, and much more. However, there is still some debate on what exactly constitutes 'exempt income', and if such income is required to be declared by the taxpayer when filing his or her income tax returns.
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  CHETHAN.S Department of Management,AIGS 2 2 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 INCOMES EXEMPTED UNDER SECTION 10 Most income that is exempted from tax is listed under Section 10 of the Income Tax Act. This section contains a list of income that is deemed or considered to be free from taxation. Exempted income specified under Section 10 is as follows: Sl. No SECTION EXEMPTIONS 1 Section 10(1) Income earned through agricultural means 2 Section 10(2) Any amount received by an individual through a coparcener from an HUF 3 Section 10(2A) Income received by partners of a firm, as shared between them 4 Section 10(4)(i) Any interest that has been paid to a person who is not a resident Indian 5 Section 10(4)(ii) Any interest that has been paid to the account of a person who is not a resident Indian 6 Section 10(4B) Any interest that has been paid to a person who is not a resident Indian, but of Indian origin 7 Section 10(5) Concession on travel given to an employee who is also a citizen of India 8 Section 10(6) Any income earned or received by a non-Indian citizen 9 Section 10(6A), (6B), (6BB), (6C) Government tax paid on the income of a foreign firm 10 Section 10(7) Allowances received by government employees stationed abroad 11 Section 10(8) Income earned by foreign employees in India under the Cooperative Technical Assistance Program 12 Section 10(8A) Income earned by a consultant
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  CHETHAN.S Department of Management,AIGS 3 3 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 13 Section 10(8B) Income earned by a consultant's staff or employees 14 Section 10(9) Income earned by any family member of a foreign employee in India under the Cooperative Technical Assistance Program 15 Section 10(10) Gratuity 16 Section 10(10A) The commuted value of the pension earned by an individual 17 Section 10(10AA) Any amount earned via encashment of leave at the time of retirement 18 Section 10(10B) Compensation paid to workers due to relocation 19 Section 10(10BB) Any remittance obtained as per the Bhopal Gas Leak Disaster Act 1985 20 Section 10(10BC) Any compensation obtained in the event of a disaster 21 Section 10(10C) Compensation in lieu of retirement from a PBC or any other firm 22 Section 10(10CC) Any income received through taxation on perquisites 23 Section 10(10D) Any amount acquired via a Life insurance policy 24 Section 10(11) Any payment received via the Statutory Provident Fund 25 Section 10(12) Any payment received via a recognised or authorised Fund 26 Section 10(13) Any payment received through a Superannuation Fund 27 Section 10(13A) House Rent Allowance 28 Section 10(14) Allowances utilised to meet business expenses 29 Section 10(15) Income received in the form of interest 30 Section 10(15A) Income received by an Indian firm through the lease of an aircraft from a
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  CHETHAN.S Department of Management,AIGS 4 4 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 foreign firm or government 31 Section 10(16) Income in the form of a scholarship 32 Section 10(17) Allowances granted to MLCs, MLAs or MPs 33 Section 10(17A) Income received in the form of a government award 34 Section 10(18) Income received in the form of pension by winners of awards for heroism 35 Section 10(19) Income received by family members of the armed forces in the form of pension 36 Section 10(19A) Income received from a single palace of an exruler 37 Section 10(20) Income received by a localised body or authority 38 Section 10(21) Income received by an association involved with scientific research 39 Section 10(22B) Income earned by a news or broadcasting agency 40 Section 10(23A) Income earned by certain Professional Institutes 41 Section 10(23AA) Income acquired through Regimental Fund 42 Section 10(23AAA) Income acquired through an employee welfare fund 43 Section 10(23MB) Insurance pension fund income 44 Section 10(23B) Income earned by village industry development institutions 45 Section 10(23BB) Income earned by state level Khadi and Village Industries Board 46 Section 10(23BBA) Income earned by regulatory bodies of institutions affiliated with religion and charity
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  CHETHAN.S Department of Management,AIGS 5 5 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 47 Section 10(23BBB) Income received by the European Economic Community 48 Section 10(23BBC) Income received through SAARC funded regional projects 49 Section 10(23BBE) Income received by the IRDA 50 Section 10(23BBH) Income received through Prasar Bharti 51 Section 10(23C) Income received by any individual through certain specified funds 52 Section 10(23D) Income earned via Mutual Funds 53 Section 10(23DA)j Income earned via a Securitisation Trust 54 Section 10(23EA) Income earned through an IPF 55 Section 10(23EB) Income received by the Credit Guarantee Trust for Small Industries 56 Section 10(23ED) Income exemption of IPF 57 Section 10(23DFB) Income exemption of specified income received by Venture Capital Firms, Funds or Businesses 58 Section 10(24) Income earned by authorised trade unions 59 Section 10(25) Income earned via provident funds and superannuation funds 60 Section 10(25A) Income earned via Employee's State Insurance Fund 61 Section 10(26), 10(26A) Income earned by Schedule Tribe Members 62 Section Income earned by an individual of Sikkimese origin
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  CHETHAN.S Department of Management,AIGS 6 6 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 10(26AAN) 63 Section 10(26AAB) Marketing regulation with regards to agricultural produce 64 Section 10(26B) Income earned by corporations established for the upliftment of backward tribes and classes 65 Section 10(26BB) Income earned by corporations established for the protection of Minority interests 66 Section 10(26BBB) Income earned by corporations established for former servicemen 67 Section 10(27) Income earned by cooperative societies established for protection of scheduled castes and tribe’s interests 68 Section 10(29A) Income received by Community Boards 69 Section 10(30) Income earned in the form of subsidies via the Tea Board 70 Section 10(31) Income earned in the form of subsidies via the concerned Board 71 Section 10(32) Income earned by a child in accordance with Section 64 of the Income Tax Act 72 Section 10(33) Income earned through Unit Trust of India capital asset transfer 73 Section 10(34) Income earned in the form of dividends through an Indian firm 74 Section 10(34A) Income earned by a shareholder through the buyback of unlisted companies 75 Section 10(35) Income received through the sale or transfer of Unit Trust of India units as well as other mutual funds 76 Section 10(35A) Income from a securitisation trust that is exempt
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  CHETHAN.S Department of Management,AIGS 7 7 ACHARYA INSTITUTE OF GRADUATE STUDIES, BENGALURU 560 107 77 Section 10(36) Income received on the sale of shares under specific conditions 78 Section 10(37) Any capital gains made on the mandatory acquirement of land in relation to urban agriculture 79 Section 10(38) Any long term capital gains made from share and security transfers that fall under the purview of Security Transaction Tax 80 Section 10(39) Any income received from any international event or function relating to sports 81 Section 10(40) Any income acquired in the form of a grant from a company deemed to be a subsidiary of the parent company 82 Section 10(41) Any income received on any asset transfer of a company or project that conducts power distribution, generation and transmission 83 Section 10(42) Any income earned by any authority that has been established by more than one country 84 Section 10(43) Any income in relation to reversal of mortgage 85 Section 10(44) Income generated through the NPS Trust 86 Section 10(45) Any allowance or perks granted to the chairman or any member of the UPSC 87 Section 10(46) Any income that comes under the category of 'specified income' with regards to specific authoritative bodies 88 Section 10(47) Any income that is exempt under the category of infrastructure debt fund 89 Section 10(48) Any income earned by a foreign firm or company due to crude oil sales within India 90 Section 10(49) Any income earned by the NFHC (National Finance Holdings Company)