Income Exempt from Tax

• Agricultural in come ( U/S

10(1 ) )

– Agriculture income means any

income derived from land which is
used for agriculture purpose and
which is assessed to land Revenue
in India.
Agricultural Income (10 (1)
• Such income must satisfy the
following three conditions:
• Rent or revenue should be derived from
land.
• The land must be used for agriculture
purposes.
• The land should be situated in India.

• It is exempt from the tax but it is included

in the total income to determined the rate
of tax at which the total without
agriculture income would be liable to tax.
2. Re ceipt from H UF (U /S
10( 2)

• Any sum received by an individual as

a member of HUF out of the estate of
income of the family is exempt from
tax and not included in the total
income of the individual.

• The logic behind this is that HUF is

already taxed on this income and
hence no tax should be levied on
distribution of the income of HUF.
3. Partn er’s share in the
pr ofit o f th e fir m: [ U/S
10(2A)]

• In case of a person who is a

partner of a firm which is
separately assessed in that
case the amount of this share in
the profits of the firm ascertain
as per the partnership deed is
exempted from tax.
4. In terest to non- r esident [ U/S
10(4)

• Interest on Bonds issued by

Government
• Interest on FCNR Deposits
• Interest on NRE Deposits

• 5. In tere st o n s pecifi ed savin gs

cert ific ates received by No n-
Resid ent I ndian Citize ns [U /S
10(4B)
6. Leave Tra vel
Concess ion [ U/ S 10( 5)
• The Value of leave travel concession received
or due to an individual is exempted to the
extent it is actually spent.
• Thus, the exemption is available to any
individual in respect of the value of any travel
concession or assistance received by or due
to him,
– From his employer for himself and his family, in
connection with his proceeding on leave to any
place in India.
– From his employer or former employer for him
self and his family, in connection with his
proceeding to any place in India after
retirement service or After the termination of
service.
Remuneration received by foreign
Diplomat [U/S 10(6)(ii)]

• The exemption from tax is available in the

case of an individual who is not a citizen of
India in respect of the remuneration
received by him as an official by whatever
name called, of an embassy, high
commission, legation, commission,
consulate or the trade representations of a
foreign state, or as a member of the staff of
any of these officials, for service in such
capacity.
• The exemption is given only to those
officials of foreign country in which
corresponding Indian officials enjoy a
similar exemption.
9 . Sa la ry o f No n-Resid ent
Emp loyee of a F oreign ship [U/S
10(6)

• The Sub-clause (vii) of section 10(6) gives

the exemption from tax in case of an
individual who is not a citizen of India and
non-resident, in respect of income
chargeable under the head Salaries
received by him for service rendered in
connection with his employment on a
foreign ship. However, his total stay in
India should not exceed in aggregate a
period of ninety days in the previous years.
11. Tax p aid on c ert ain o th er
in come o f No n-R esid ent[ U/S
10(6B)]

• Incase of Non-resident or foreign company

deriving income other than salary, or Fees
for technical services from Government or
an Indian concern in pursuance of an
agreement entered into before 1st june,2002
by the Central Government with the
Government of Foreign state or
international organization and the tax on
such income is payable by the Government
or Indian concern to the Central
Government under the terms that
agreement approved before 1st June,2002
by the Central Government in that case the
tax so paid is exempt from tax.
Fore ig n Allow ances and per qui sit es to
Gover nment E mploy ee s out si de India [U/ S 10(7)
]

• Sub-section (7) of section 10

states that any allowance or
perquisites paid or allowed as
such out side India by the
Government to a citizen of India
for rendering services outside
India will be totally exempted
from tax.
Other Exemptions
• 14. Income of a consultant under a t echnic al
assis tant gr ant Agr eemen t Between t he
inte rnational or ganiz at ion and the
Gover nm ent of for eign s tate [U /S 10(8A) ]

• 15.Income of an I ndividual who is ass igned t o

duti es in In di a in c on nect ion w it h any
techn ical assistance agr eemen t enter ed and
proj ec t in accordance with an agr eemen t
enter ed into by the cent ral G ov er nment and
the Agency : [U/ S10(8B )].

• 16.P ayment under the Bhopal G as Leak

Disaster (processing of claims) Act, 1985:
[U /S 10(10BB)] .
17. Compensation on retirement of an
employee [U/S 10(10C)]

• At the time of his voluntary

retirement or termination of his
service in accordance with any
scheme of voluntary retirement or in
case of public sector company
referred to in point (a) above, a
scheme of voluntary separation, shall
be exempted to the extent such
amount does not exceeds five
rupees, shall be exempted to the
extent such amount does not
exceeds five lakh rupees
18. Tax borne by the employer on Non –monetary
perquisite provided to employee [U/S 10(10cc)]

• Any amount of tax borne by the

employer on the non monetary
perquisites provided to the employee
shall be exempt u/s 10(10cc). Thus
the tax obligation of the employee
towards non-monetary perquisite (i.e.
perquisite in kind ) given by the
employer, will not be treated as
perquisite u/s 17(2).
LIC/PF Exemptions
• 19.Amount r eceived in life insurance
policy:[U/ S 10( 10)]
• Any sum received under a life insurance policy,
including the sum allocated by way of bonus on
such policy shall be totally exempt from tax.

• 20. P ayment fr om pr ovident fund[ U/ S 10(11)

• Any payment from a provident fund to which the
provident funds Act, 1925, applies or from any other
provident fund set up by the central Government
and notified in the official gazette (i.e. public
provident fund)is totally exempted from tax.
RPF/ HRA etc
• 21. Accum ulat ed balance from a
recogni zed pr ov ident fund[ u/ s 10( 12) ]
• The accumulated balance due and
becoming payable to an employee
participating a recognized provident fund,
to the extent provided in rule 8 of part A of
schedule, is exempted from tax.

• 22. P ay ment from an approved

superannuati ng fund [ U /S 10( 13) ]
• 23. House ren t al lowance
[U/S 10(1 3A) ]
Special Allowance
• 24.Specia l All owa nce fo r
expenses[ U/S 10(1 4)]
• 25. C erta in i ncome by wa y o f
in te re st etc . e xempted fro m
tax[U/ S 1 0(1 5).
• Certain income by way of interest,
premium etc from certain securities
certificate, bonds, deposit etc. as
specified under this section is
exempted from tax.
Scholarship/ MP
Allowance
• 26. Sc holars hip [ U/S 1 0(16)]
• Scholarship granted to meet the
cost of education is totally exempt
from tax and will not be included in
the computation of income.
• 27.All owa nces r eceiv ed by the
member o f p arlia ment or s ta te
le gisla ture[U/ S 1 0(1 7)
Awards
• 28. Awards[U /S 10(17A)]
• Awards received , whether in cash or kind, as
stated below shall be exempted from tax as per sub
section 17A of section 10

• 29. Family pensi on received by t he family

member of ar med forces[ U /S 10 (19)]
• Family pension received by the widow or
children or nominated heirs, of a member of armed
forces including parliament forces of the union ,
where the said member dies in the course of
operation duties shall be exempted from tax.

• 30. Annual value of one palace of a r uler[ U/ S

10(19A) ]
31. Pension received by a per son ,
Honored by a Gal lant ry Awar d U /S
10( 18) ]

• This clause provides exemption

for any income by way of :-
• a) Pension received by an individual
who has been in service of central or
state Gov. and has been
awarded,”Parama Vir Chakra)””Maha
Vir Chakra” or Vir Chakra
• b) Family pension received by any
member of the family in case of
death of the awardee.
•
• 32. In com e o f membe r of
Schedul ed Tr ibe [U/S 10{ 26} ]
• 
• 33 Income of a Resi dent of
Ladakh Di st ri ct {U/S
10[ 26A] }
34. Clubbed I ncome
of a Minor Ch ild {U /S
10[32]}
• In case of the income of a minor
child clubbed with that of the
parent U/S 64(1A), such income
is exempted from tax upto Rs.
1500/- in respect of each minor
child whose income is clubbed.
35. In come a rising fro m Transfe r
of Un its o f Un it s, 1 964 {U /S
10(33)}

• Any income arising from transfer

of capital asset being a unit of
Unit Scheme, 1964 and where
the transfer of such an asset
takes place on or after 1st April
2002, it shall be exempt from
tax
36. In come b y wa y o f D ivid end
{U /S 1 0(3 4)}

• Income by way of dividend as

referred in section 115-0 is exempted
from tax in the hands of the
shareholders. Section 115-0 provides
that every domestic company
declaring dividend (including interim
dividend) shall pay the tax on
dividend. In view of this, tax being
levied on a company on distributed
profits, the dividend income in the
hands of the shareholders will now
be exempt from tax u/s 10(34).
• 37. In com e f rom Mutual
Fund etc. {U/S 10( 35)}
• 
• 38. In com e f rom Transf er of
Long Term Capital Asset
bei ng Equity Shares {U/S
10( 36) }
• 39. C apita l Ga in o n
comp ensatio n r eceiv ed o n
comp ulsory a cquisit ion of
Agric ultu ral Land i n c ertain
urban A reas {U /S 10(3 7)}
•  
• 40. L ong T erm c apita l g ain s or
Tra nsfe r o f Eq uity Shares i n a
Company o r Units o f an Equity
oriented f und {u /S 10(3 8)}