Incomes Exempt From Tax – Tax Free Incomes

These are the exempted incomes under Section 10 of Income Tax Act and also known as Tax-Free Incomes. The Exempt Incomes and Allowances are provided as per rules of Income Tax Department, India.

Incomes Exempt under Section 10

1. Agriculture Income under Section 10(1): The Income Tax Act under Section 2(1A) defines about Agriculture Income. It clearly explains in Section 2(1A) that which Income is considered as Agriculture Income. The Agriculture Income means:
   • Any revenue or rent obtained from the land which is used for Agricultural purposes and is situated in India.
   • Any Agriculture Income derived from seedlings or saplings grown in a nursery, that income is exempted from Tax.
2. The share of Income from HUF fully exempted under Section 10(2): The amount received by a family income; the amount received in the case of the impartible estate by any member of the HUF (Hindu Undivided Family) is exempted from paying tax.
3. The share of Income received from Partnership Firm fully exempted under Section 10 2(A): The share of Income from firm assessed as firm (PFAF) is fully exempted from tax under section 10 2(A). The exemption does not apply to the interest on remuneration and capital received by the partner of the LLP/firm and is limited to the share of profit.
4. Certain interest to non-residents is exempted under Section 10(4):
   • In the case of non-resident if the income is by the way of interest on certain notified bonds or securities and income on the redemption of such bonds is exempted to tax as per the section 10(4)(i).
   • According to Foreign Exchange Management Act, 1999 in the case of an individual if any income is by way of interest on money standing to his credit in a Non-Resident (External) Account in any bank in India as per the FEM rules, is exempted to tax under section 10 (4)(ii).
5. Leave Travel Concession in India under Section 10(5): The Travel concession to an Indian citizen employee is exempted to tax up to the limits laid as per in section 10 (5).
6. Gratuity is exempted under Section 10(10) as per the limits.
7. Commuted value of the pension is fully exempted under Section 10(10A) as per the conditions.
8. Compensation received at the time of voluntary retirement under Section 10(10C).
9. The amount received from Life Insurance Policy is exempted under Section 10(10D).
10. The Payments received from Provident Fund under Section 10(11), (12).
11. Payment received from an approved Superannuation Fund under Section 10(13).
12. House Rent Allowances under Section 10(13A).
13. Special Allowances under Section 10(14):  Under special Allowances like Transport, Conveyance Allowance, Daily Allowance, Uniform allowance, Helper allowance, Research Allowance, Children Education allowance, Children’s Hostel Expenditure allowances are exempted to tax.
14.  Interest on Securities under Section 10(15).
15. Educational Scholarship under Section 10(16).
16. Allowances received by MP/MLA/MLC are fully exempted under Section 10(17).
17. Any award instituted or notified by State or Central Government is fully exempted under Section 10(17A).
18. Any pension received by winners of Paramvir Chakra, Mahavir Chakra and family pension received by children/windows/nominated heirs of a deceased member of the armed forces.
19. Income from one palace self-occupied by former rulers shall be fully exempted under Section 10(19A).
20. Income of a local authority is exempted as per the conditions that are given under Section 10(20).
21. Income of certain authorities set up to manage religious and charitable institutions exempted as per conditions that are given under Section 10(23BBA).
22. Income of a corporation is set up for promoting the interest Scheduled castes, tribes; backward classes are exempted as per the conditions.
23. Income by way of Dividend from the Indian Company under Section 10(34).
24. Income of a shareholder on account of buyback of shares by the company under Section 10(34A).
25. Income from units of UTI and other Mutual Funds under Sections 10(35).
26. Long Term Capital Gain on the transfer of securities covered under Share Transaction Tax.
27. Capital gains in case of compulsory acquisition of urban agricultural land exempted under Section 10(37).
28. Long term capital gain on transfer of securities covered under Section 10(38) of Transaction Tax.
29. Under Section 10(39) the Income from an international sporting event is exempted from tax.
30. Income of certain non-profit authority or body under Section 10(42).
31. Income of New Pension System Trust under Section 10(44).
32. Under Section 10(43) Loan in the case of a reverse mortgage is exempted.
33. Exemption of specified income of notified body or authority or trust or commission/board under Section 10(46).
34. Any income of a notified infrastructure debt fund set-up in accordance with prescribed guidelines under Section 10(47).
35. Tax exemption to National Financial Holdings a Company Limited under Section 10(49).
36. Income of a minor child under Section an 10(32) including basic provisions of Section 64(1A).