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Exempt Income

This document outlines 17 types of non-taxable income under Section 10 of the Indian Income Tax Act. It discusses exemptions for agriculture income, amounts received from HUFs or partnership firms, leave travel concessions, gratuity, pension, leave salary encashment, amounts from insurance policies and provident funds, house rent allowance, certain special allowances, scholarships, government awards, minor children's income, and dividends. The document provides details on calculation methods and monetary limits for various exemptions.

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Sarvar Pathan
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2K views18 pages

Exempt Income

This document outlines 17 types of non-taxable income under Section 10 of the Indian Income Tax Act. It discusses exemptions for agriculture income, amounts received from HUFs or partnership firms, leave travel concessions, gratuity, pension, leave salary encashment, amounts from insurance policies and provident funds, house rent allowance, certain special allowances, scholarships, government awards, minor children's income, and dividends. The document provides details on calculation methods and monetary limits for various exemptions.

Uploaded by

Sarvar Pathan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Non Taxable Income

Presentation

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NON TAXABLE INCOME U/S 10

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1. Agriculture Income u/s 10(1)

Agriculture Income from a land situated in India which is used for


a) the purpose of agriculture from where the revenue is derived
b) then it is fully exempt in the hands receiver u/s 10(1).

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2. Receipt by a member from his HUF u/s 10(2)

Any amount received by a member from his HUF out of the estate of income
of the HUF is not taxable in the hands of the member u/s 10(2).

Dabur’s Family Tree

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3. Share of Profit received by a partner from his partnership firm u/s 10(2A)

A partner receives 3 types of income from his firm


a) Salary/Remuneration/Commission/Bonus – taxable in the hands of partner as
his business income
b) Interest on Capital -- taxable in the hands of partner as his business income
c) Share of Profit – Exempt in the hands of partner u/s 10(2A)

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4. Leave Travel concession u/s 10(5)
Individual Travel Concession

From his employer

For himself For himself & his family

Proceeding on leave Proceeding after retirement or


termination of service

Any place in India

Actual travelling expenditure is exempt

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Note :
1. Family – Spouse & Children (dependent or independent),Parent, Brother & Sister (dependent)
2. Only 2 children (born on or after 1/10/98)
3. In case of twins – consider only one child
4. Exemption – 2 journey performed in a block of four calendar years commencing from 1986.
Rule 2B :

Different Situation Amount Exempt


1. By Air Economy class air fare –place of origin & destination
(farthest point from origin by the shortest route)
2. By Rail First class A.C.
least of – a) shortest route, b) amount spent
3. Other than Air & Rail First class A.C.
least of – a) shortest route, b) amount spent
4. Recognized public transport First class A.C.
least of – a) shortest route, b) amount spent
5. Not having recognized public First class A.C.
transport least of – a) shortest route, b) amount spent
5. Gratuity u/s 10(10)

Gratuity

Govt. employee Payment of gratuity act-1972 Others


(POGA-1972) (Non-govt employees &
not covered by POGA)

Fully exempt Exempt least of :-


1) Actual Amount Received Exempt least of :-
2) 15 days salary for every 1)Actual Amount Received
completed year of service 2)½ month average salary
3) Monetary limit– Rs.10,00,000 for every fully completed Yr.
3)Monetary limit-Rs.10,00,000
# Salary = Basic+D.A.
# Salary = Last drawn salary #Salary= Basic+D.A.+Com.
#1 month = 26 days #average of last 10 month salary
# Completed year = in excess of 6 month #Year=Only fully completed year
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6. Pension u/s 10(10A)
Pension

Uncommuted Commuted
(periodical) (lumpsum)

Govt employee Others


Fully Taxable
(govt/non govt)
Received Not Received
Fully Exempt
Gratuity Gratuity

1/3 of FCV is ½ of FCV is


Exempt Exempt

FCV = Fully commuted value


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7. Leave Salary Encashment u/s 10(10AA)
Leave Salary Encashment

During continuation of On retirement/termination


employment of employment

Fully Taxable Govt. employees Others

Exempt least of :-
1. Actual Amount Received
Fully Exempt 2. 10 times average salary
3. Cash equivalent of leave calculated
at 30 days credit for each year of
service
4. Monetary limit- Rs.300,000

# Salary = Basic+DA+Comm.
# Average of last 10 months
Tripathi Online Educare # Year = Only fully completed year
8) Amount received from LIC (Life Insurance Policy) u/s 10(10D)
Any amount received from LIC towards maturity of policy is fully exempt.

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9) Amount received from statutory provident fund & public provident fund u/s 10(11)
Any amount received on maturity or withdrawal from SPF account or PPF
account is fully exempt u/s 10(11)

10) Amount received from Recognised provident fund u/s 10(12)


Any amount received from RPF account on maturity or withdrawal is fully
exempt u/s10(12) if an employee has rendered continuous services with his
employer for 5 years or more.

11) Amount received from an approved superannuation fund u/s 10(13)


Any amount received from an approved superannuation fund is fully exempt
from tax along with accrued interest there on.

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12. House Rent Allowance u/s 10(13A)
Exempt least of :
a) Actual Amount Received
b) Rent Paid – 10% of Salary
c) 50% of Salary (for metro cities)
OR
40% of Salary (for other cities)
Salary = Basic + DA + Commission (on due basis for the period the rented
accommodation is occupied by the employee only).

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13. Special allowance notified as exempt u/s 10(14)
a) Conveyance allowance for pursuing academic research & other professional
pursuits --- fully exempt (to the extent used for official work).
{expense incurred in the performance of the duties of an office like Travelling/
Transfer/ Outstation/ Daily/ Uniform allowance}

b) Area/Remote Area/Border Area/Hilly Area/Snow Covered Area Allowance –


fully exempt unless any exemption amount is not given.

c) Tribal Area Allowance – exempt upto rs. 200/-pm max.

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d) Children Education Allowance
Children Education Allowance is exempt up to Rs.100/-pm, per child for
maximum 2 children.
e) Children Hostel Allowance
Children Hostel Allowance is exempt up to Rs. 300/-pm, per child for
maximum 2 children.
f) Transport Allowance (between home & office)
Transport Allowance is exempted up to Rs.800/-pm maximum & in case of
physically handicapped, blind etc. it is Rs.1600/-pm maximum.

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14. Scholarship u/s 10(16)
Any amount received towards scholarship for educational purpose is fully
exempt u/s 10(16).

15. Award from Government u/s 10(18)


Any award from the government like Bharat Ratna, Param Vir Chakra,etc. is
exempt u/s 10(18)
Lataji receiving the Bharat Ratna by President
K.R.Narayan

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16. Income of Minor child u/s 10(32)
The income of minor child is to be first clubbed with the income of the parent u/s
64(1A). Thereafter exemption is available to the parent up to Rs.1500/- per child,
per year.
17. Dividend u/s 10(34)
Any income by way of dividends by an indian company is fully exempt.

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Thank You!

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