Most Important Exemption under Total Income
According the provision of Income Tax Act ,1961 there is various exemption available under section 10 from total income.
1. Agriculture Income:
We can still consider India is the country mostly depending upon the agriculture and income generated from the activities of agriculture. Agriculture income shall be excluded from the assessee total income (section 10, (1)) however, it shall be taken for considering rate to tax non-agriculture income.
2. Share Of Profit From A Firm:
A partners share in the total income of the firm is totally exempted from the total income of the hands of the partner because firm is separately assess as such. However, any salary interest commission paid or payable to the partner which was deductible from the total income of the firm shall be included in the income of the partners total income as his business.
3. Leave Travel Concession:
If an employee goes on travel with his family and traveling cost is reimbursed by the employer, then such reimbursement is fully exempted. But some provisions for it was as bellow;
1) Journey may be performed during service or after retirement.
2) Employer may be present or former.
3) Journey must be performed to any place within India , outside travelling is not allow
4) In case, journey was performed to various places together, then exemption is limited to the extent of cost of journey from the place of origin to the farthest point reached, by the shortest route.
5) Employee may or may not be a citizen of India.
6) Stay cost is not exempt.
4. Remuneration To Person Who Is Not A Citizen Of India In Certain Cases [Sec. 10(6)]
Following remuneration to an individual who is not a citizen of India shall be exempt- Remuneration received by him as an official of an embassy, high commission, legation, commission, consulate, or the trade representation of a foreign state or as a staff of any of these officials provided corresponding Indian officials in that foreign country enjoy similar exemptions in their country – Sec. 10(6)(ii).
Remuneration received as an employee of a foreign enterprise for services rendered by him during his stay in India provided –
a. the foreign enterprise is not engaged in any business or profession in India;
b. his stay in India does not exceed 90 days in aggregate; and
c. such remuneration is not liable to be deducted from the income of the employer under this Act – Sec.10(6) (vi).
Remuneration for services rendered in connection with his employment on a foreign ship provided his total stay in India does not exceed 90 days in the previous year – Sec. 10(6)(viii).
Remuneration received as an employee of the Government of a foreign State during his stay in India in connection with his training in any undertaking owned by Government, Government company, subsidiary of a Government company, corporation established by any Central, State or Provincial Act and any society wholly financed by the Central or State Government – Sec. 10(6)(xi)
5. Tax Paid By Government On Royalty (10(6a)
6.Tax Paid By Government On Income Of A Non-Resident Or A Foreign Company [Sec. 10(6b)]
7.Tax Paid On Income From Leasing Of Aircraft [Sec. 10(6bb)]
Tax paid by an Indian company on income arising from leasing of aircraft, etc. to the Government of a foreign state or foreign enterprise under an approved agreement entered into with such Indian company engaged in the business of operation of aircraft, provided such agreement was entered into between 1-4-1997 and 31-3-1999 or after 31-3-2007.
8. Fees For Technical Services In Project Connected With Security Of India [Sec. 10(6C)]:
Any income arising to notified foreign company by way of royalty or fees for technical services received in pursuance of an agreement entered into with Central Government for providing services in or outside India in projects connected with security of India.
9. Income From Service Provided To National Technical Research Organisation [Sec. 10(6D)]:
Any income arising to a non-resident or to a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the National Technical Research Organisation
10. Allowance Or Perquisite Paid Outside India [Sec. 10(7)]:
Any allowance or perquisite paid outside India by the Government to a citizen of India for Rendering Services Outside India.
11. Remuneration Received For Co-Operative Technical Assistance Programme With An Agreement Entered Into By The Central Government In Certain Cases [Sec. 10(8)].
12. Remuneration Received By Non-Resident Consultant Or Employee Or Family Member Of Such Consultant [Sec. 10(8a), (8b) & (9)].
13. Death-Cum-Retirement-Gratuity [Sec. 10(10)]:
Gratuity is a retirement benefit given by the employer to the employee in consideration of past services. Sec. 10(10) deals with the exemptions from gratuity income. Such exemption can be claimed by a salaried assessee. Gratuity received by an assessee other than employee shall not be eligible for exemption u/s 10(10). E.g. Gratuity received by an agent of LIC of India is not eligible for exemption u/s 10(10) as agents are not employees of LIC of India.
14. Compensation For Any Disaster [Sec. 10(10bc)]
Any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under this Act on account of any loss or damage caused by such disaster.
15. Sum Received Under A Life Insurance Policy [Sec. 10(10d)]:
Any sum received under a life insurance policy including bonus on such policy is wholly exempt from tax. However, exemption is not available on – 1. any sum received u/s 80DD(3) or u/s 80DDA(3); or 2. any sum received under a Keyman insurance policy; or 3. any sum received under an insurance policy issued on or after 1-4-20121 in respect of which the premium payable for any of the years during the term of the policy exceeds 10%2 of the actual capital sum assured.
16. Payment From National Pension Trust [Sec. 10(12a) & 10(12b)]:
Any amount from the national pension scheme trust to an assessee on closure of
his account or on his opting out of the pension scheme referred to in sec. 80CCD, to the extent it does not exceed 60% of the total amount payable to him at the time of such closure or his opting out of the scheme [Sec. 10(12A)] Any payment from the National Pension System Trust to an employee under the pension scheme referred to in sec. 80CCD, on partial withdrawal made out of his account in accordance with the terms and conditions, specified under the Pension Fund Regulatory and Development Authority Act, 2013, to the extent it does not exceed 25% of the amount of contributions made by him [Sec. 10(12B)]
17. Payment From Approved Superannuation Fund [Sec. 10(13)]:
Any payment from an approved superannuation fund made – • on the death of a beneficiary; or • to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or • by way of refund of contributions on the death of a beneficiary; or • by way of refund of contributions to an employee on his leaving the service (otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement) to the extent to which such payment does not exceed the contributions made prior to 1-4-1962 and any interest thereon. • by way of transfer to the account of the employee under a pension scheme referred to in sec. 80CCD and notified by the Central Government.
18. Income From Leasing Of Aircraft [Sec. 10(15A)].
Any payment made, by an Indian company engaged in the business of operation of aircraft, to acquire an aircraft or an aircraft engine (other than a payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease from the foreign Government or a foreign enterprise under an approved agreement. The agreement must not be entered into- between 1-4-1997 to 31-3-1999; and on or after 1-4-2007.
19. Daily Allowance, Etc. To MP And MLA [Sec. 10(17)].
Any income by way of – a. Daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof; b. Any allowance received by any person by reason of his membership of Parliament; c. Constituency Allowance received by any person by reason of his membership of State legislature.
20. Income Of Professional Institutions [Sec. 10(23A)].
Any income (other than income chargeable under the head “Income from house property” or any income received for rendering any specific services or income by way of interest or dividends derived from its investments) of professional association shall be exempt provided – a. Such association or institution is established in India having as its object the control, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or other specified profession; b. Such association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and c. The association or institution is approved by the Central Government.
21. Income Of Mutual Fund [Sec. 10(23D)].
Any income of –
a. A Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or regulation made there under;
b. A Mutual Fund set up by a public sector bank or a public financial institution or authorized by the Reserve Bank of India and subject to certain notified conditions.
22. Income Of Business Trust [Sec 10(23FC)]:
Any income of a business trust by way of
a) interest received or receivable from a special purpose vehicle; or b) dividend referred to in sec. 115-O(7) Ø “Special purpose vehicle” means an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the regulations under which such trust is granted registration.
23. Income Of Specified Boards [Sec. 10(29A)]:
Any income accruing or arising to The Coffee Board; The Rubber Board; The Tea Board; The Tobacco Board; The Marine Products Export Development Authority; The Coir Board; The Agricultural and Processed Food Products Export Development Authority and The Spices Board.
24. Subsidy Received From Tea Board [Sec. 10(30)]:
Any subsidy received from or through the Tea Board under any scheme for replantation or replacement of tea bushes or for rejuvenation or consolidation of areas used for cultivation of tea as the Central Government may specify, is exempt.
25. Awards And Rewards [Sec. 10(17A)].
Any payment made, whether in cash or in kind –
a. in pursuance of any award instituted in the public interest by the Central Government or any State Government or by any other approved body; or
b. as a reward by the Central Government or any State Government for approved purposes.
26. Income Of Scientific Research Association [Sec. 10(21)]:
Any income of a scientific research association [being approved for the purpose of Sec. 35(1)(ii)] or research association which has its object, undertaking research in social science or statistical research [being approved and notified for the purpose of Sec. 35(1)(iii)], is exempt provided such association—
a. applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established; and
b. invest or deposit its funds in specified investments.
27. Income Of Professional Institutions [Sec. 10(23A)]:
Any income (other than income chargeable under the head “Income from house property” or any income received for rendering any specific services or income by way of interest or dividends derived from its investments) of professional association shall be exempt provided- a. Such association or institution is established in India having as its object the control, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or other specified profession; b. Such association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and c. The association or institution is approved by the Central Government.
28. Expenditure Related To Exempted Income [Sec. 14A]:
For the purposes of computing the total income, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income, which does not form part of the total income under this Act. Where the AO is not satisfied with the correctness of the claim of such expenditure by assessee, he can determine the disallowable expenditure.