• Kandivali West Mumbai 400067, India
  • 022 39167251
  • support@email.com
June 10, 2022

Income Exempt from Tax (Tax Free Incomes)

by CA Shivam Jaiswal in Income Tax

Income Exempt from Tax (Tax Free Incomes)

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:

  • Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.
  • 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.
  • Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A).

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.

Certain interest to non-residents [Section 10(4)]

As per section 10(4)(i), in the case of a non-resident any income by way of interest on certain notified securities or bonds (including income by way of premium on the redemption of such bonds) is exempt from tax.
As per section 10(4)(ii) in the case of an individual, any income by way of interest on money standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Management Act, 1999, and the rules made thereunder is exempt from tax.
Exemption under section 10(4)(ii) is available only if such individual is a person resident outside India as defined in clause (w) of section 2 of the Foreign Exchange Management Act, 1999 or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account.

Interest on notified savings certificates [Section 10(4B)]

As per section 10(4B), in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income by way of interest on notified savings certificates (subscribed in convertible foreign exchange) issued before the 1st day of June, 2002 by the Central Government is exempt from tax.

Interest on Rupee Denominated bonds [(Section 10(4C)]

Any interest received or receivable by a non-resident or foreign company in respect of Rupee Denominated Bond (as referred to in Section 194LC) issued outside India during the period 17- 09-2018 to 31-03-2019 by an Indian company/business trust shall be exempt from tax.

Income from transfer of GDRs, Rupee Denominated Bonds or Derivatives by Category-III AIFs [(Section 10(4D)]

Specified funds shall be eligible to claim exemption with respect to income accrued or arisen or received by it which is attributable to units held by a non-resident (not being a PE in India) or to the investment division of offshore banking unit. Such exemption is allowed in respect of the following incomes:

  • Income from transfer of a capital asset as referred to in Section 47(viiab) on a recognised stock exchange located in IFSC and consideration is paid or payable in ‘convertible foreign exchange’;
  • Income arising from transfer of securities (other than shares in a company resident in India);
  • Income from securities issued by a non-resident (not being a PE of a non-resident in India) and where such income otherwise does not accrue or arise in India;
  • Income from a securitization trust which is chargeable under the head ‘Profits and gains from business or profession’; or
  • Income attributable to the investment division of offshore banking unit .

Income on transfer of non-deliverable forward contracts entered into with an offshore banking unit of IFSC [Section 10(4E)]

Any income accrued or arisen to, or received by a non-resident as a result of the transfer of non- deliverable forward contracts or offshore derivative instruments or over – the counter derivative shall be exempt from tax. However, such non-deliverable forward contracts shall be entered into with an offshore banking unit of IFSC which commenced operations on or before the 31st March, 2024 and fulfils prescribed conditions.

Royalty income of non-resident on leasing of aircraft to an IFSC unit [Section 10(4F)]

Royalty income of a non-resident on account of leasing of aircraft or ship in a previous year to an IFSC unit shall be exempt from tax if such unit is eligible for deduction under section 80LA in that year and has commenced its operations on or before the 31st March 2024

Income of non-resident from Portfolio Services [Section 10(4G)]

Any income received by a non-resident from portfolio of securities or financial products or funds, managed or administered by any portfolio manager on behalf of such non-resident. This exemption will be available only if income arises in an account maintained with an Offshore Banking Unit in any International Financial Services Centre. However, the exemption will be limited to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India.

Leave travel concession [Section 10(5)]

An employee can claim exemption under section 10(5) in respect of Leave Travel Concession. Exemption under section 10(5) is available to all employees (i.e. Indian as well as foreign citizens).
Exemption is available in respect of value of any travel concession or assistance received or due to the employee from his employer (including former employer) for himself and his family members in connection with his proceeding on leave to any place in India. Other provisions to be kept in mind in this regard are as follows:
Where journey is performed by air: Amount of exemption will be lower of amount of economy class air fare of the National Carrier by the shortest route or actual amount spent.
Where journey is performed by rail: Amount of exemption will be lower of amount of air- conditioned first class rail fare by the shortest route or actual amount spent. The same rule will apply where journey is performed by any other mode and the place of origin of journey and destination are connected by rail.
Where the place of origin and destination are not connected by rail and journey is performed by any mode of transport other than by air:

The exemption will be as follows:

  • If recognised public transport exists: Exemption will be lower of first class or deluxe class fare by the shortest route or actual amount spent.
  • If no recognised public transport exists: Exemption will be lower of amount of air- conditioned first class rail fare by the shortest route (considering as if journey is performed by rail) or actual amount spent.

Block: Exemption is available for 2 journeys in a block of 4 years. The block applicable for current period is calendar year 2014-17. The previous block was of calendar year 2010-2013.
Carry over: If an employee has not availed of travel concession or assistance in respect of one or two permitted journeys in a particular block of 4 years, then he is entitled to carry over one journey to the next block. In this situation, exemption will be available for 3 journeys in the next block. However, to avail of this benefit, exemption in respect of journey should be utilised in the first calendar year of the next block. In other words, in case of carry over, exemption is available in respect of 3 journeys in a block, provided exemption in respect of at least 1 journey is claimed in the first year of the next block.
Exemption is in respect of actual expenditure on fare, hence, if no journey is performed, then no exemption is available.
Family: Family will include spouse and children of the individual, whether dependent or not and parents, brothers, sisters of the individual or any of them who are wholly or mainly dependent on him.
Exemption is restricted to only 2 surviving children born after October 1, 1998 (multiple births after first single child will be considered as one child only), however, such restriction is not applicable to children born before October 1, 1998.

Remuneration of a foreign trainee [Section 10(6)(xi)]

As per section 10(6)(xi), the remuneration received by a foreign trainee as an employee of foreign Government during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—

  1. the Government ; or
  2. any company owned by the Central Government, or any State Government
  3. any company which is a subsidiary of a company referred to in item (ii) ; or
  4. any corporation established by or under a Central, State or Provincial Act ; or
  5. any co-operative society wholly financed by the Central Government, or any State Government

Technical fees received by a notified foreign company [Section 10(6C)]

Section 10(6C) grants exemption from tax in respect of income arising to notified foreign company by way of royalty or fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India.

Allowance/perquisites to Government employee outside India [Section 10(7)]

As per section 10(7), any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India is exempt from tax.

Income of foreign Government employee under co-operative technical assistance programme [Section 10(8)]

As per section 10(8), remuneration received directly or indirectly by an individual, from the foreign Government in connection with a co-operative technical assistance programme and projects in accordance with an agreement entered into by the Central Government and such foreign Government, is exempt from tax. Further, exemption is available in respect of any other income of such an individual which accrues or arises outside India and is not deemed to accrue or arise in India, provided such individual is required to pay income-tax/ social security tax to the foreign Government.

Income of a family member of an employee serving under co-operative technical assistance programme [Section 10(9)]

As per section 10(9), the income of any member of the family of any such individual as is referred to in section 10(8)/(8A)/(8B) accompanying him to India, which accrues or arises outside India and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State or country of origin of such member, as the case may be, is exempt from tax.

Note: The provisions of section 10(9A) shall not be applicable with effect from Assessment Year 2023-24. [Amendment by the Finance Act, 2022]

Death-cum-retirement gratuity received by Government servants [Section 10(10)(i)]

Section 10(10)(i) grants exemption to gratuity received by Government employee (i.e., Central Government or State Government or local authority).

Gratuity received by a non-Government employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]

As per section 10(10)(ii), exemption in respect of gratuity in case of employees covered by the Payment of Gratuity Act, 1972 will be lower of following :

  • 15 days’ salary × years of service.
  • Maximum amount specified, i.e., Rs. 20,00,000*. Gratuity actually received.
  • Limit increased from Rs. 10 lakhs to Rs. 20 lakhs vide Notification No. 1420(E), dated 29-3- 2018.

Gratuity received by a non-Government employee not covered by Payment of Gratuity Act, 1972 [Section 10(10)(iii)]

As per section 10(10)(iii), exemption in respect of gratuity in case of employees not covered by the Payment of Gratuity Act, 1972 will be lower of following :

  • Half month’s salary for each completed year of service, i.e., [Average monthly salary × ½] × Completed years of service. . Rs. 10,00,000.
  • Gratuity actually received.

Pension [Section 10(10A)]:

As per section 10(10A), any commuted pension, i.e., accumulated pension in lieu of monthly pension received by a Government employee is fully exempt from tax. Exemption is available only in respect of commuted pension and not in respect of un-commuted, i.e., monthly pension.

Exemption in respect of commuted pension in case of a non-Government employee will be as follows:

  • If the employee receives gratuity, one third of full value of commuted pension will be exempt from tax under section 10(10A).
  • If the employee does not receive gratuity, one half of full value of commuted pension will be exempt from tax under section 10(10A).

Leave salary [Section 10(10AA)]

As per section 10(10AA), leave encashment by a Government employee at the time of retirement (whether on superannuation or otherwise) is exempt from tax. In the hands of non-Government employee exemption will be least of the following:

  1. Period of earned leave standing to the credit in the employee’s account at the time of retirement (*) × Average monthly salary ($).
  2. Average monthly salary ($) × 10 (i.e., 10 months’ average salary).
  3. Maximum amount as specified by the Government, i.e., Rs. 3,00,000.
  4. Leave encashment actually received at the time of retirement.

(*)Leave credit to the account of the employee at the time of retirement should be restricted to 30 days per year of service if leave entitlement as per service rules exceeds 30 days per year of actual service.
($) Salary for the above purpose means average salary drawn in the past ten months immediately preceding the retirement (i.e., preceding the day of retirement) and will include basic salary, dearness allowance (if considered for computing all the retirement benefits) and commission based on fixed percentage of turnover achieved by the employee.
Apart from the above items, salary for this purpose does not include any other allowances or perquisites.

Retrenchment compensation [Section 10(10B)]

As per section 10(10B), compensation received at the time of retrenchment is exempt from tax to the extent of lower of the following:

  • An amount calculated in accordance with the provisions of section 25F(b) of the Industrial Dispute Act, 1947; or
  • Maximum amount specified by the Central Government (Rs. 5,00,000);
  • Actual amount received.

Under the Industrial Dispute Act, a workman is entitled to retrenchment compensation, equal to 15 days’ average pay for each completed year of continuous service or any part in excess of six months.
Compensation in excess of aforesaid limits is taxable as salary. However, the aforesaid limit is not applicable in cases where compensation is paid under any scheme approved by the Central Government.

Compensation for Bhopal Gas Leak Disaster [Section 10(10BB)]

Compensation [in accordance with Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985] received by victims of Bhopal gas leak disaster is exempt from tax. However, compensation received for any expenditure which is allowed as deduction from taxable income is not exempt.

Compensation on account of any disaster [Section 10(10BC)]

Any amount received from the Central Government or State Government or a Local Authority by an individual or his legal heirs as compensation on account of any disaster is exempt from tax. However, no deduction is available in respect of the amount received or receivable to the extent such individual or his legal heirs has been allowed a deduction under the Act on account of loss or damage caused due to such disaster. Disaster here means any disaster due to any natural or man- made causes or by accident/negligence which results in substantial loss of human life or damage to property or environment and the magnitude of such disaster is beyond coping capacityof community of the affected area.

Payment at the time of voluntary retirement [Section 10(10C)]

As per section 10(10C), any compensation received at the time of voluntary retirement or termination of service is exempt from tax, if the following conditions are satisfied:

  • Compensation is received at the time of voluntary retirement or termination (or in the case of an employee of public sector Company, at the time of voluntary separation).
  • Compensation is received by an employee of following undertakings-
    • public sector company ; or
    • any other company ; or
    • an authority established under a Central, State or Provincial Act ; or
    • a local authority ; or
    • a co-operative society ; or
    • a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956) ; or
    • an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961) ; or
    • any State Government; or
    • the Central Government; or
    • Notified institutes having importance throughout India or in any State or States,
    • Notified institute of management
  • Compensation is received in accordance with the scheme of voluntary retirement/separation, which is framed in accordance with guidelines prescribed under Rule 2BA of Income-tax Rules, 1962*.
  • Maximum amount of exemption is Rs. 5,00,000.
  • Where exemption is allowed to an employee under section 10(10C) for any assessment year, no exemption under this section shall be allowed to him for any other assessment year.
  • With effect from assessment year 2010-11, section 10(10C) has been amended to provide that where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under section 10(10C) shall be allowed to him in relation to such or any other assessment year.

*Guidelines prescribed under Rule 2BA of Income -tax Rules. 1962

Voluntary retirement scheme should be framed in accordance with the following guidelines:

  1. it should apply to an employee who has completed 10 years of service or completed 40 years of age. This requirement would not be in case of amount received by an employee of a public sector company under the scheme of voluntary separation framed by such public sector company.
  2. it should apply to all employees (by whatever name called) including workers and executives of a company or of an authority or of a co-operative society, as the case may be, excepting directors of a company or of a co-operative society;]
  3. the scheme of voluntary retirement or voluntary separation should be drawn to result in overall reduction in the existing strength of the employees;
  4. the vacancy caused by the voluntary retirement or voluntary separation is not to be filled up;
  5. the retiring employee of a company shall not be employed in another company or concern belonging to the same management
  6. the amount receivable on account of voluntary retirement or voluntary separation of the employee does not exceed the amount equivalent to
    1. 3 months salary* for each completed year of service or
    1. salary at the time of retirement multiplied by the balance months of service left before the date of his retirement

*Salary for this purpose will include basic salary, dearness allowance, if the terms of service so provide and commission based on fixed percentage of turnover achieved by the employee.

Tax on perquisites paid by the employer [Section 10(10CC)]

Perquisites to employees mean any facility provided by the employer to the employees. There are two types of perquisites, viz., monetary and non-monetary. Value of perquisite is charged to tax in the hands of the employees, however, the employer may at his will pay tax (on behalf of employees) on such perquisites. In such a case, the amount of tax paid on such perquisites by the employer on behalf of the employees will be treated as income of the employees and is charged to tax in his (i.e., in employee’s) hands. However, by virtue of section 10(10CC) tax paid by employer (on behalf of employee) on non-monetary perquisites will be exempt from tax in the hands of employees.
Such tax paid by the employer shall not be allowed as a deductible expenditure in the hands of employer under section 40. Section 10(10CC) provides exemption only in respect of tax on non- monetary perquisites. In other words, this section does not provide exemption in respect of perquisites or tax paid on monetary perquisites.

Amount paid on life insurance policy [Section 10(10D)]

As per section 10(10D), any amount received under a life insurance policy, including bonus is exempt from tax. Following points should be noted in this regard:

  • Exemption is available only in respect of amount received from life insurance policy.
  • Exemption under section 10(10D) is unconditionally available in respect of sum received for a policy which is issued on or before March 31, 2003. However, in respect of policies issued on or after April 1st, 2003, the exemption is available only if the amount of premium paid on such policy in any financial year does not exceed 20% (10% in respect of policy taken on or after 1st April, 2012) of the actual capital sum assured. With effect from 1-4- 2013, in respect of policy taken in the name of a person suffering from diseases specified under section 80DDB or in the name of a person suffering from disability specified under section 80U, the limit will be increased to 15% of capital sum assured.
  • Value of premium agreed to be returned or of any benefit by way of bonus (or otherwise), over and above the sum actually assured, which is received under the policy by any person, shall not be taken into account while calculating the actual capital sum assured.
  • Amount received on death of the person will continue to be exempt without any condition.

Exemption in respect of amount received from public provident fund/statutory provident fund/ recognised provident fund/ un-recognised provident fund [Section 10(11)/(12)]

The tax treatment of various items in case of different provident funds is as follows:

Employer’s ContributionEmployer’s contribution to such fund is not treated as income of the employee.
InterestInterest credited to such fund is exempt in the hands of the employee. [see note 4]
Amount received at the time of terminationLump sum amount received from such fund, at the time of termination of service is exempt in the hands of employees.

Public Provident Fund

Employer’s ContributionEmployers do not contribute to such fund.
InterestInterest credited to such fund is exempt.
Amount received at the time of terminationLump sum amount received from such fund at the time of termination of service is exempt from tax.

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 assessee 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 closure or his opting out of the scheme, is exempt from tax.
With effect from April 01, 2020, 60 % of the amount payable shall be 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

Payment from approved superannuation fund in specified circumstances and subject to certain limits [Section 10(13)]

Approved superannuation fund means superannuation fund which is approved by the Commissioner of Income-tax. Tax treatment of such fund is as follows:

  • Employer’s contribution is exempt from tax, however, from assessment year 2010-11 employer’s contribution in excess of Rs. 1,50,000 per annum is charged to tax as perquisite. Employee’s contribution qualifies for deduction under section 80C and interest on accumulated balance is not liable to tax.
  • Payments made from the fund are exempt from tax under section 10(13) in following cases:
  • Payment on death of beneficiary; or
  • Payment to employee in lieu of, or in commutation of an annuity on his retirement at or after the specified age or on his becoming incapable prior to such retirement; or
  • Payment by way of refund of contributions on the death of a beneficiary; or
  • Payment to employee by way of refund of his contributions on leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or
  • Payment to employee by way of transfer to his account under a pension scheme referred to in section 80CCD.

House rent allowance [Section 10(13A)]

As per section 10(13A), read with rule 2A, the exemption in respect of HRA will be lower of the following amounts:

  • 50% of salary, when residential house is situated at Mumbai, Kolkata, Delhi or Chennai and 40% of salary where residential house is situated at any other place.
  • HRA actually received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year.
  • Rent paid in excess of 10% of salary.

Salary will include basic salary, dearness allowance forming part of salary while computing all retirement benefits and commission based on fixed percentage of turnover achieved by the employee. Apart from this, salary for this purpose does not include any other allowances/perquisites.

Salary for this purpose shall be computed on due basis in respect of period during which the accommodation is occupied by the employee in the previous year. Hence, any payments not pertaining to the previous year or not pertaining to the period of occupation of the accommodation shall be excluded.

Prescribed allowances or benefits [Section 10(14)]

As per section 10(14), read with rule 2BB following allowances granted to an employee are exempt from tax subject to certain limit:

AllowancesExemption Limit
Children Education AllowanceUp to Rs. 100 per month per child up to a maximum of 2 children is exempt
Hostel Expenditure AllowanceUp to Rs. 300 per month per child up to a maximum of 2 children is exempt
Transport Allowance granted to an employee to (who is a blind and handicap) meet expenditure on commuting between place of residence and place of duty  Rs. 3,200 per month for blind and handicapped employees is exempt
Allowance granted to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance.Amount of exemption shall be lower of following: 70% of such allowance; orRs. 10,000 per month.
Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an officeExempt to the extent of expenditure incurred for official purposes
Travelling Allowance to meet the cost of travel on tour or on transferExempt to the extent of expenditure incurred for official purposes
Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of dutyExempt to the extent of expenditure incurred for official purposes
Helper/Assistant AllowanceExempt to the extent of expenditure incurred for official purposes
Research Allowance granted for encouraging the academic research and other professional pursuitsExempt to the extent of expenditure incurred for official purposes
Uniform AllowanceExempt to the extent of expenditure incurred for official purposes
Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)Amount exempt from tax varies from Rs. 300 to Rs. 7,000 per month.
Border area, Remote Locality or Disturbed Area orAmount exempt from tax varies from Rs.
Difficult Area Allowance (Subject to certain conditions and locations)200 to Rs. 1,300 per month.
Tribal area allowance in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa  Up to Rs. 200 per month
Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)  Up to Rs. 2,600 per month
Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)  Up to Rs. 1,000 per month
Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)    Up to Rs. 3,900 per month
Underground Allowance to employees working in uncongenial, unnatural climate in undergroundmines  Up to Rs. 800 per month
High Altitude Allowance granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet)Up to Rs. 1,600 per month (for altitude above 15,000 feet)
Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations)  Up to Rs. 4,200 per month
Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations)  Up to Rs. 3,250 per month

Interest on securities [Section 10(15)]

Interest incomes which are exempt under section 10(15) could be explained with the help of the following table-

SectionIncomeExemption to
10(15)(i)Interest, premium on redemption, or other payment on notified securities, bonds, certificates, and deposits, etc. (subject to notified conditions and limits)All assessees
10(15)(iib)Interest on notified Capital Investment Bonds notified prior to 1-6-2002Individual/HUF
10(15)(iic)Interest on notified Relief BondsIndividual/HUF
10(15)(iid)Interest on notified bonds (notified prior to 1-6-2002) purchased    in foreign exchange (subject to certain conditions)Individual   –   NRI/ nominee or survivor of NRI/individual to whom bonds have been gifted by NRI
10(15)(iii)Interest on securitiesIssue Department of Central      Bank     of Ceylon
10(15)(iiia)Interest on deposits made with scheduled bank with approval of RBIBank       incorporated abroad
10(15)(iiib)Interest payable to Nordic Investment BankNordic      Investment Bank
10(15)(iiic)10(15)(iiic) Interest payable to the European Investment Bank on loan granted by it in pursuance of framework- agreement dated 25-11-1993 for financial corporation between Central Government and that bankEuropean Investment Bank
10(15)(iv)(a)Interest    received    from   Government or    from local authority on moneys lent to it before 1-6-2001 or debts owed by it before 1-6-2001, from sources outside IndiaAll assessees who have lent money, etc., from sources outside India
10(15)(iv)(b)Interest received from industrial undertaking in India on moneys lent to it under a loan agreement entered into before 1-6-2001Approved       foreign financial institution
10(15)(iv)(c)Interest at approved rate received from Indian industrial undertaking on moneys lent or debt incurred before 1-6- 2001 in a foreign country in respect of purchase outside India of raw materials, components or capital plant and machinery, subject to certain limits and conditionsAll assessees who have lent such money, or in favour of whom such debt has been incurred
10(15)(iv)(d)Interest    received    at    approved   rate    from specified financial institutions in India on moneys lent from sources outside India before 1-6-2001All    assessees     who have       lent       such moneys
10(15)(iv)(e)Interest received at approved rate from other Indian financial institutions or banks on moneys lent for specified purposes from sources outside India before 1- 6-2001 under approved loan agreementAll    assessees     who have       lent       such moneys
10(15)(iv)(f)Interest received at approved rate from Indian industrial undertaking on moneys lent in foreign currency from sources outside India under loan agreement approved before 1-6-2001All    assessees     who have       lent       such moneys
10(15)(iv)(fa)Interest payable by scheduled bank, on deposits in foreign currency when acceptance of such deposits by bank is approved by RBINon-resident         or individual/HUF who is not ordinarily resident in India
10(15)( iv)(g)Interest received at approved rate, from Indian public companies eligible for deduction under section 36(1)(viii) and formed with main object of providing long-term housing finance, on moneys lent in foreign currency from sources outside India under loan agreement approved before 1-6-2003All    assessees     who have       lent       such moneys
10(15)( iv)(h)Interest received from any public sector company in respect of notified bonds or debentures and subject to certain conditionsAll assessees
10(15)( iv)(i)Interest    received from Government   on   deposits in notified scheme out of moneys due on account of retirementIndividual                – Employee of Central Government/State Government/Public sector company
10(15)(v)Interest on securities held in Reserve Bank’s SGL A/c No. SL/DH-048 and Deposits made after 31-3-1994 for benefit of victims of Bhopal Gas Leak Disaster held in such account with RBI or with notified public sector bankWelfare Commissioner, Bhopal Gas Victims, Bhopal
10(15)(vi)Interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015All assessees
10(15)(vii)10(15)(vii) Interest on notified bonds issued by a local authority/State Pooled Finance EntityAll assessees
10(15)(viii)Interest on deposit made on or after 1-4-2005 in an Offshore Banking Unit referred to in section 2(u) of the Special Economic Zones Act, 2005Non-resident          or person who is not ordinarily resident
10(15)(ix)Interest payable by a unit located in an International Financial Services Centre in respect of monies borrowed by it on or after the 1st day of September, 2019.Non-resident

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.

Read More as Under

Income-Exempt-from-Tax-Tax-Free-Incomes

Enter your email address:

Subscribe to faceless complainces

Please follow and like us:
Pin Share
RSS
Follow by Email