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Updated on : 6 May, 2018
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Incomes Exempt from Income Tax

This page contains information about various exemptions available under Section 10 of Income Tax Act.

House Rent Allowance Leave travel concession
Encashment of unutilized earned leave at the time of retirement Income of minor child
Death-cum-Retirement Gratuity Commuted value of pension
Amount recd. on Voluntary Retirement / Voluntary Separation Retrenchment Compensation received under ID Act, 1947.
Payment from PPF or Statutory Provident Fund Payment from Sukanya Samriddhi Account
Sum received from the National Pension System Any sum received under a Life Insurance Policy including bonus
Interest on NRE account india Interest on Notified Capital Investment Bonds
Amount received by individual member from HUF Share of profit received by partners from a partnership firm
Interest on notified savings certificates Income of any member of family of any individual ..
Compensation received for any disaster Tax paid by the employer on perquisites..
Accumulated balance payable to employee participating in recognized PF Payment from Approved Superannuation Fund on death / retirement, etc.
Prescribed allowances for performance of official duties Interest on notified Relief Bonds
Interest on notified bonds .. Interest payable by scheduled bank ..
Interest received from Government on deposits .. Interest on deposits made on or after ..
Scholarships granted to meet the cost of education Family pension received by the widow, ..
Remuneration received by Foreign Diplomats/Consulate .. Remuneration received by non-Indian citizen ..
Salary received by a non-resident, for services .. Remuneration recd. by an Individual, who is not a citizen of India ..
Foreign allowances or perquisites paid .. Foreign income and remuneration from Foreign Govt. ..
Foreign income and remuneration received by consultant .. Foreign income and remuneration recd. by an ..
Daily Allowances received by MP Any Allowance received by MP ..
Any Constituency Allowance received Notional annual value of any one palace ..
Any income received by a unit holder from an investment fund.. Any income received by a unit holder from business trust..
Specified income of a member of Specified Scheduled Tribes .. Income from any source in the State of Sikkim ..
Capital gains on compulsory acquisition of urban agriculture land .. Amount recd. as a loan under reverse mortgage ..
Any notified allowance/ perquisite paid to the Chairman/retired Chairman ..
House Rent Allowance
Section 10(13A)
Exempt AmountLeast of the following is exempt from tax:
(i) 50% of salary* for metro cities** and 40% of salary for other cities
(ii) Actual HRA received
(iii) Excess of rent paid over 10% of salary*
* Salary = Aggregate of basic salary, DA (to the extent it forms part of retirement benefits) and turnover based commission
** Delhi, Mumbai, Kolkata, Chennai
Available toIndividual - Salaried Employee


Leave travel concession or assistance received by an employee (Subject to certain conditions and limited to amount actually spent)
Section 10(5)
Notes:
  • The amount should be received by employee from his employer or former employer for leave to any place india during term of service or after retirement/termination;
  • Exemption shall be available for amount incurred in respect of fare for going anywhere india by employee along with his family. The family means - her/his spouse and children, parents, brothers and sisters only when they are wholly or mainly dependent on the assessee.
  • The exemption can be availed for two journeys in a block of 4 calendar years.
  • Exemption shall be available for journey performed by a shortest route and by prescribed mode of transportations in prescribed situations.
Exempt AmountLimited to amount actually spent and subject to maximum limits as specified
Available toIndividual - Salaried Employee


Encashment of unutilized earned leave at the time of retirement
Section 10(10AA)
a) Government employee
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee
b) Other employees
Exempt AmountLeast of the following shall be exempt from tax:
  1. Amount actually received
  2. Unutilized earned leave* X Average monthly salary
  3. 10 months Average Salary**
  4. ₹ 3,00,000

    *While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer

    **Average salary = Average Salary*** of last 10 months immediately preceding the retirement

    ***Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission

Available toIndividual - Salaried Employee


Income of minor child clubbed under Section 64(1A) with parent's income
Section 10(32)
Exempt Amount₹ 1,500 per child or Income of Minor, whichever is lower
Available toIndividual


Death-cum-Retirement Gratuity
Section 10(10)
(i) Government employees
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee
(ii) Other employees who are covered under Gratuity Act, 1972 -
Exempt AmountLeast of following amount is exempt from tax:
1. (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months.
2. ₹ 10,00,000
3. Gratuity actually received.
*7 days in case of employee of seasonal establishment.
** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite
Available toIndividual - Salaried Employee
(iii) Other employees who are not covered under Gratuity Act, 1972
Exempt AmountLeast of following amount is exempt from tax:
1. 1/2 X Average Salary* X Completed years of service
2. ₹ 10,00,000
3. Gratuity actually received.
*Average salary = Average Salary of last 10 months immediately preceding the month of retirement
**Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission
Available toIndividual - Salaried Employee


Commuted value of pension
Section 10(10A)
a) Government employee
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee
b) Other employees
Exempt Amount1. 1/3rd of full value of commuted pension, if gratuity is received by the employee
2. 1/2 of full value of commuted pension, if gratuity is not received by the employee
Available toIndividual - Salaried Employee


Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions)
Section 10(10C)
Exempt AmountLeast of the following is exempt from tax:
1) Actual amount received as per the guidelines i.e. least of the following
a) 3 months salary for each completed year of services
b) Salary at the time of retirement X No. of months of services left for retirement; or
2) ₹ 5,00,000
Available toIndividual - Salaried Employee


Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947. (Subject to certain conditions)
Section 10(10B)
Exempt AmountLeast of the following shall be exempt from tax:
a) An amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947;
b) ₹ 5,00,000; or
c) Amount actually received.
Available toIndividual - Salaried Workmen


Payment from Public Provident Fund or Statutory Provident Fund
Section 10(11)
Exempt AmountEntire Amount
Available toIndividual and HUF


Any payment from an account, opened in accordance with the Sukanya Samriddhi Account Rules, 2014
10(11A)
Exempt AmountEntire amount (including interest accrued on the deposit made in such account) shall be exempt from tax
Available toIndividual (who deposited the amount in accordance with Sukanya Samriddhi Account Rules, 2014)


Sum received from the National Pension System Trust by an employee on account of closure or opting out of the pension scheme referred to in section 80CCD
Section 10(12A)
Exempt AmountExempt up to 40% of amount due at the time of closure or opting out of the scheme.
Available toIndividual


Any sum received under a Life Insurance Policy including bonus (excluding Keyman Insurance Policy) (Subject to certain conditions)
Section 10(10D)
Exempt AmountEntire Amount
Available toAny Assessee


Interest on money standing to the credit in a Non-resident (External) account india
Section 10(4)(ii)
Exempt AmountEntire amount
Available toPerson resident outside India (under FEMA Act) and person who has been permitted to maintain said account by RBI


Interest on Notified Capital Investment Bonds notified prior to 01-06-2002
Section 10(15)(iib)
Exempt AmountInterest Amount
Available to Individual and HUF


Amount received by individual member from HUF. [Subject to the provisions of Section 64(2)]
Section 10(2)
Exempt AmountEntire amount
Available toIndividual, being a member of an HUF


Share of profit received by partners from a partnership firm
Section 10(2A)
Exempt AmountEntire amount
Available toPartners in a partnership firm


Interest on notified savings certificates issued before 01-06-2002 by the Central Government and subscribed to in convertible foreign exchange
Section 10(4B)
Exempt AmountEntire Amount
Available toIndividual, being a citizen of India or a person of Indian Origin, who is a non resident.


Income of any member of family of any individual [referred to in section 10(8), 10(8A) or 10(8B)] which accrues or arises outside India and is not deemed to accrue or arise india and which is subject to tax in that foreign country
Section 10(9)
Exempt AmountEntire Amount
Available toIndividual


Compensation received for any disaster from Government/ Local Authority (Subject to certain conditions)
Section 10(10BC)
Exempt AmountEntire amount except for the amount allowed as deduction under this Act on account of loss caused by such disaster.
Available toIndividual or his Legal heir


Tax paid by the employer on perquisites (not provided for by way of monetary payments) given to employee
Section 10(10CC)
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee


Accumulated balance payable to employee participating in recognized PF (subject to certain conditions)
Section 10(12)
Exempt AmountTo the extent provided in Rule 8 of Part A of the Fourth Schedule of the Income-Tax Act.
Available toIndividual - Salaried Employee


Payment from Approved Superannuation Fund on death or retirement of employee, etc. (Subject to certain conditions)
W.e.f assessment year 2017-18, any amount transferred from superannuation fund to the notified pension scheme referred to in Section 80CCD shall also be exempt from tax
Section 10(13)
Exempt AmountExempt subject to certain limits
Available toIndividual - Salaried Employee


Prescribed allowances for performance of official duties
Section 10(14)
Exempt AmountTo the extent allowance actually incurred for the performance of official duties.
Available toIndividual - Salaried Employee


Interest on notified Relief Bonds
Section 10(15)(iic)
Exempt AmountInterest Amount
Available toIndividual and HUF


Interest on notified bonds (notified prior to 01-06-2002) purchased in foreign exchange (subject to certain conditions)
Section 10(15)(iid)
Exempt AmountInterest Amount
Available toIndividual, being a:
a) NRI or nominee or survivor of NRI;
b) Individual to whom bonds have been gifted by NRI


Interest payable by scheduled bank on deposits in foreign currency where acceptance of such deposits by the bank is duly approved by RBI
Section 10(15)(iv)(fa)
Exempt AmountInterest Amount
Available toa) Non-resident
b) Individual or HUF being a resident but not ordinary resident


Interest received from Government on deposits in notified scheme out of moneys due on account of retirement
Section 10(15)(iv)(i)
Exempt AmountInterest Amount
Available toIndividual, being an employee of Central and State Government or Public Sector Company.


Interest on deposits made on or after 01.04.2005 is an offshore banking unit referred to in Section 2(u) of the Special Economic Zones Act, 2005
Section 10(15)(viii)
Exempt AmountInterest Amount
Available toPerson who is a non-resident or not ordinarily resident.


Scholarships granted to meet the cost of education
Section 10(16)
Exempt AmountEntire Amount
Available toIndividual


Family pension received by the widow, children or nominated heirs of a member of the armed forces (including paramilitary forces) where death of such member has occurred in the course of operational duties (subject to prescribed conditions and circumstances)
Section 10(19)
Exempt AmountEntire Amount
Available toIndividual - Widow or children or nominated heirs of members of the armed forces.


Remuneration received by Foreign Diplomats/Consulate and their staff (Subject to conditions)
Section 10(6)(ii)
Exempt AmountEntire Amount
Available toIndividual (not being a citizen of India)


Remuneration received by non-Indian citizen as employee of a foreign enterprise for services rendered india, if:
Section 10(6)(vi)
  1. Foreign enterprise is not engaged in any trade or business india
  2. His stay india does not exceed in aggregate a period of 90 days in such previous year
  3. Such remuneration is not liable to deducted from the income of employer chargeable under this Act
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee (not being a citizen of India)


Salary received by a non-resident, for services rendered in connection with his employment on a foreign ship if his total stay india does not exceed 90 days in the previous year
Section 10(6)(viii)
Exempt AmountEntire Amount
Available toNon-resident Individual - Salaried Employee (not being a citizen of India)


Remuneration received by an Individual, who is not a citizen of India, as an employee of the Government of a foreign state during his stay india in connection with his traing in any Government Office/Statutory Undertaking, etc
Section 10(6)(xi)
Exempt AmountEntire Amount
Available toIndividual - Salaried Employee (not being a citizen of India)


Foreign allowances or perquisites paid or allowed by Government to its employees posted outside India
Section 10(7)
Exempt AmountEntire Amount
Available toIndividual- Salaried Employee (being a citizen of India)


Foreign income and remuneration received from Foreign Government in connection with any co-operative technical assistance programme and projects in accordance with agreement entered into by Central Government and Foreign Government (Subject to certain conditions)
Section 10(8)
Exempt AmountEntire Amount
Available toIndividual


Foreign income and remuneration received by consultant (agreement relating to his engagement must be approved) out of funds made available to an international organization (agency) under a technical assistance grant agreement between that agency and the Government of a foreign State (Subject to certain conditions)
Section 10(8A)
Exempt AmountEntire Amount
Available toIndividual, being a:
a) A non-resident engaged by the agency for rendering technical services india;
b) Non-Indian citizen; or
c) Indian citizen who is not ordinarily resident india


Foreign income and remuneration received by an employee off the consultant as referred to in Section 10(8A) (contract of service must be approved by the prescribed authority before commencement of service)
Section 10(8B)
Exempt AmountEntire Amount
Available toIndividual, being a:
a) Non-Indian citizen; or
b) Indian citizen who is not ordinarily resident india


Daily Allowances received by members of Parliament
Section 10(17)(i)
Exempt AmountEntire Amount
Available toIndividual - Member of Parliament or State Legislature or any Committee thereof.


Any Allowance received by MP under Member of Parliament (Constituency Allowance) Rules, 1986
Section 10(17)(ii)
Exempt AmountEntire Amount
Available toIndividual - Member of Parliament


Any Constituency Allowance received
Section 10(17)(iii)
Exempt AmountEntire Amount
Available toIndividual - Member of State Legislature


Notional annual value of any one palace occupied by former Ruler
Section 10(19A)
Exempt AmountEntire amount
Available toIndividual


Any income received by a unit holder from an investment fund [being of the same nature as income chargeable under the head PGBP]
Section 10(23FBB)
Exempt AmountThat proportion of distributed income which is of the same nature as income chargeable under the head PGBP.
Available toUnit holder of an investment fund specified under Section 115UB


Any income received by a unit holder from business trust, not being that proportion of the income of business trust which is in the nature of:
Section 10(23FD) a) interest received or receivable from a SPV; or
b) any income from renting or leasing or letting out any real estate asset owned directly by such business trust (REIT)
Exempt AmountAny income (except interest received from a SPV or any rental income) distributed by business trust to its unit holders
Available toUnit holder of a business trust.


Specified income of a member of Specified Scheduled Tribes residing in Specified Areas
Section 10(26)
Exempt AmountEntire Amount
Available toIndividual being a member of Scheduled Tribe


Income from any source in the State of Sikkim or income by way of dividend or interest on securities (Subject to certain conditions)
Section 10(26AAA)
Exempt AmountEntire Amount
Available toIndividual, being a Sikkimese (other than Sikkimese Woman who, after 31-03-2008, marries non-Sikkimese)


Capital gains arising on compulsory acquisition of urban agriculture land, if:
Section 10(37)
a) Compensation is received after 31-03-2004; and
b) Agriculture land was used by taxpayer or his parents for agricultural purpose during last two years
(Subject to certain conditions)
Exempt AmountEntire Amount of capital gains
Available toIndividual and HUF


Amount received by an Individual as a loan under reverse mortgage scheme referred to in Section 47(xvi)
Section 10(43)
Exempt AmountEntire Amount
Available toIndividual


Any notified allowance/ perquisite paid to the Chairman/retired Chairman or any other member/ retired member of UPSC
Section 10(45)
Exempt AmountEntire Amount
Available toIndividual - Chairman/ Retired Chairman or any other member/ retired member of UPSC


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