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TAX FREE INCOMES

November 11, 2017

Income tax act, 1961 provides us a various relief , in these one is exemption from the Tax on the in the business completely or partly , here we detailed out few:-

Agricultural Income [Section 10(1)]
As per section 10(1), agricultural income earned by the taxpayer in India is exempt from tax. Agricultural income is defined under section 2(1A) of the Income-tax Act. As per section 2(1A), agricultural income generally means:
(a) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.
(b) Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce.
(c) Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A).
(d) Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

Amount received by a member of the HUF from the income of the HUF, or in case of impartible estate out of income of family estate [Section 10(2)]
As per section 10(2), amount received out of family income, or in case of impartible estate, amount received out of income of family estate by any member of such HUF is exempt from tax.

Share of profit received by a partner from the firm [Section 10(2A)]
As per section 10(2A), share of profit received by a partner from a firm is exempt from tax in the hands of the partner. Further, share of profit received by a partner of LLP from the LLP will be exempt from tax in the hands of such partner. This exemption is limited only to share of profit and does not apply to interest on capital and remuneration received by the partner from the firm/LLP.

Payment from account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 [Section 10(11A)]
As per section 10(11A), any payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 made under the Government Savings Bank Act, 1873 is exempt from tax. In other words, interest and withdrawals from such account will be exempt from tax under section 10(11A).

Payment from the National Pension System Trust to an employee [Section 10(12A)]
Any payment from the National Pension System Trust to an employee on closure of account or his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed 40 % of the total amount payable to him at the time of closureor his opting out of the scheme, is exempt from tax.

Partial withdrawal from NPS [Section 10(12B)]
To provide relief to an employee withdrawing partial amount from National Pension System (NPS) Trust. A new clause (12B) is inserted under section 10 with effect from assessment year 2018-19 to provide that the withdrawal from NPS will not be chargeable to tax if the following conditions are satisfied:-
1. Amount of withdrawal should not exceed 25% of total contribution made by an employee in NPS.
2. Partial withdrawal should be made in accordance with the terms and conditions specified under the Pension Fund Regulatory and Development Authority Act, 2013 and the regulations made thereunder.

Educational scholarship [Section 10(16)]
Any amount received as educational scholarship (i.e., scholarship to meet the cost of education is exempt from tax in the hands of recipient).

Daily allowance to a Member of Parliament [Section 10(17)]
Following allowances are exempt from tax in the hands of a Member of Parliament and a
Member of State Legislature—
• Daily allowance received by a Member of Parliament or by a Member of State Legislature or by member of any committee thereof.
• Any other allowance received by a Member of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986.
• Any Constituency allowance received by a Member of State Legislature.

Awards [Section 10(17A)]
Any payment received in pursuance of following (whether paid in cash or in kind) is exempt from tax:
 Any award instituted in the public interest by the Central Government or State Government or by any other body approved by the Central Government in this behalf.
 Any reward by the Central Government or any State Government for such purpose as may be approved by the Central Government in this behalf in the public interest.

Income of local authority [Section 10(20)]
The following income of a local authority is exempt from tax:
a) Income which is chargeable under the head “Income from house property”, “Capital gains” or “Income from other sources” or
b) Income from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or
c) Income from business of supply of water or electricity within or outside its own jurisdictional area.

Income of Educational Institutions [Section 10(23C)(iiiab)/(iiiad)/(vi)]

Section 10(23C)(iiiab)
Income of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government would be exempt under section 10(23C)(iiiab).

Section 10(23C)(iiiad)
Income of any university or other educational institution existing solely for educational purposes and not for purposes of profit would be exempt under section 10(23C)(iiiad) if the aggregate annual receipts of such university or educational institution do not exceed Rs. 1 Core.

Section 10(23C)(vi)
Income of any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority. CBDT authorize the Commissioners of Income-tax (Exemptions) for this purpose via Notification No. 76/2014 dated 1-12-2014.

Income of Hospital [Section 10(23C)(iiiac)/(iiiae)/(via)]
Income arises to any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, shall be exempt from tax under following situations:
1) If the hospital or other institution is wholly or substantially financed by the Government then exemption would be available under section 10(23C)(iiiac).

2) If the aggregate annual receipt of such hospital or institution do not exceed Rs. 1 Crore then exemption would be available under section 10(23C)(iiiae).
3) If the hospital is approved by the prescribed authority, i.e., by Commissioners of Income-tax (Exemptions) as authorized by CBDT via Notification No. 76/2014 dated 1-12-2014 then exemption would be available under section 10(23C)(via).

Income of Charitable Institution or Fund [Section 10(23C)(iv)]
Any income of a charitable institution or fund which is approved by the prescribed authority having regard to its objects and its importance throughout India or throughout any State or States is exempt from tax.

Income of religious/charitable trust [Section 10(23C)(v)]
Income of any trust (including any other legal obligation) or institution formed wholly for public religious purposes or wholly for public religious and charitable purposes, which is approved by the prescribed authority having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof, is exempt from tax.
CBDT has authorized Commissioners of Income-tax (Exemptions) via Notification No. 75/2014 dated 1-12-2014 for granting approval under this section.

In these exemption we did not include the Salary exemptions as already covered under our salary chapter and other non-relevant exemption , still you want to ask anything on it you may write to us we will help you on that matter.

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