As per the Finance (No.2) Act, 2014, Income Tax Free Income
level is very high. Apart from this we all known that Income is
payable on all types of Incomes earned by Taxpayee in India even-though,
there are some exceptions to avoid this rule and some Incomes have been
specially exemption from Income Tax. Such Income is referred to as
Income Tax Free Income. The most popular Tax Free Income is namely :-
- Agricultural Income (Section 10(1)).
- 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)]
- Share of profit received by a partner from the firm [Section 10(2A)]
- Certain interest to non-residents [Section 10(4)]
- Interest on notified savings certificates [Section 10(4B)]
- Leave travel concession [Section 10(5)]
- Remuneration received by specified diplomats and their staff [Section 10(6)(ii)]
- Salary of a foreign employee and non-resident member of crew [Section 10(6)(vi),(viii)]
- Remuneration of a foreign trainee [Section 10(6)(xi)]
- Tax paid on behalf of foreign company deriving income by way of royalty or fees for technical services [Section 10(6A)]
- Tax paid on behalf of foreign company or non-resident in respect of other income [Section 10(6B)]
- Tax paid on behalf of foreign Government or foreign enterprise deriving income by way of lease of aircraft or aircraft engine [Section 10(6BB)]
- Technical fees received by a notified foreign company [Section 10(6C)]
- Allowance/perquisites to Government employee outside India [Section 10(7)]
- Income of foreign Government employee under co-operative technical assistance programme [Section 10(8)]
- Remuneration or fees received by a non-resident consultant/its foreign employees [Section 10(8A),(8B)]
- Income of a family member of an employee serving under co-operative technical assistance programme [Section 10(9)]
- Death-cum-retirement gratuity received by Government servants [Section 10(10)(i)]
- Gratuity received by a non-Government employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]
- Gratuity received by a non-Government employee not covered by Payment of Gratuity Act, 1972 [Section 10(10)(iii)]
- Pension [Section 10(10A)]
- Leave salary [Section 10(10AA)]
- Retrenchment compensation [Section 10(10B)]
- Compensation for Bhopal Gas Leak Disaster [Section 10(10BB)]
- Compensation on account of any disaster [Section 10(10BC)]
- Payment at the time of voluntary retirement [Section 10(10C)]
- Tax on perquisites paid by the employer [Section 10(10CC)]
- Amount paid on life insurance policy [Section 10(10D)]
- Exemption in respect of amount received from public provident fund/statutory provident fund/recognised provident fund/un-recognised provident fund [Section 10(11)/(12)]
- Payment from approved superannuation fund in specified circumstances and subject to certain limits [Section 10(13)]
- House rent allowance [Section 10(13A)]
- Prescribed allowances or benefits [Section 10(14)]
- Interest on securities [Section 10(15)]
- Lease rent of an aircraft [Section 10(15A)]
- Educational scholarship [Section 10(16)]
- Daily allowance to a Member of Parliament [Section 10(17)]
- Awards [Section 10(17A)]
- Pension to gallantry award winner [Section 10(18)]
- Family pension received by the family members of armed forces [Section 10(19)]
- Annual value of one palace [Section 10(19A)]
- Income of local authority [Section 10(20)]
- Income of research association [Section 10(21)]
- Income of a news agency [Section 10(22B)]
- Income of a professional association [Section 10(23A)]
- Income received on behalf of Regimental Fund [Section 10(23AA)]
- Income of a fund established for welfare of employees [Section 10(23AAA)]
- Income of pension fund [Section 10(23AAB)]
- Income from Khadi or village industry [Section 10(23B)]
- Income of Khadi and Village Industries Boards [Section 10(23BB)]
- Incomes of statutory bodies for the administration of public charitable trust [Section 10(23BBA)]
- Income of European Economic Community [Section 10(23BBB)]
- Income of SAARC fund [Section 10(23BBC)]
- Income of Secretariat of Asian Organisation of Supreme Audit Institutions [Section 10(23BBD)]
- Income of Insurance Regulatory and Development Authority [Section 10(23BBE)]
- Income of North - Eastern Development Financial Corporation Limited [Section 10(23BBF)]
- Income of Central Electricity Regulatory Commission [Section 10(23BBG)]
- Income of the Prasar Bharati [Section 10(23BBH)]
- Income of certain national funds [Section 10(23C)(i)/(ii)/(iii)]
- Income of National Foundation for Communal Harmony [Section 10(23C)(iiia)], Section 10(23C)(iiiad), Section 10(23C)(vi)
- Income of Hospital [Section 10(23C)(iiiac)/(iiiae)/(via)]
- Income of Charitable Institution or Fund [Section 10(23C)(iv)]
- Income of religious/charitable trust [Section 10(23C)(v)]
- Income of mutual fund [Section 10(23D)]
- Income of a securitisation trust [Section 10(23DA)]
- Income of notified investor protection fund [Section 10(23EA)]
- Income of Credit Guarantee Fund Trust [Section 10(23EB)]
- Income of the notified investor protection fund set - up by commodity exchange [Section 10(23EC)]
- Income of Investor Protection Fund set by a depository [Section 10(23ED)]
- Income of a venture capital fund or a venture capital company from investment in a venture capital undertaking [Section 10(23FB)]
- Income of a of a Business Trust [Section 10(23FC)]
- Distributed Income of a Unit Holder from the Business Trust [Section 10(23FD)]
- Income of a registered trade union [Section 10(24)]
- Income of provident fund [Section 10(25)]
- Income of the Employees’ State Insurance Fund [Section 10(25A)]
- Income of a member of a Scheduled Tribe [Section 10(26)]
- Income of a “Sikkimese” individual [Section 10(26AAA)]
- Income of an Agricultural Produce Marketing Committee/Board [Section 10(26AAB)]
- Income of corporation or other body or institution or association established for promoting the interest of members of Scheduled Caste, etc. [Section 10(26B)]
- Income of corporation established for promoting interest of minority caste [Section 10(26BB)]
- Income of corporation established for ex-servicemen [Section 10(26BBB)]
- Income of a co-operative society formed for promoting the interests of the members of Scheduled Castes or Scheduled Tribes [Section 10(27)]
- Income of coffee board, rubber board, etc. [Section 10(29A)]
- Subsidy from the Tea Board [Section 10(30)]
- Income of minor [Section 10(32)]
- Capital gains on transfer of US 64 [Section 10(33)]
- Dividends and interest on units [Section 10(34)/(35)]
- Income of a shareholder on account of buy back of shares by the company [Section 10(34A)]
- Income of an investor received from a securitisation trust [Section 10(35A)]
- Capital gains in case of compulsory acquisition of urban agricultural land [Section 10(37)]
- Long - term capital gains on transfer of equity shares or units of an equity oriented mutual fund or a unit of a business trust covered by securities transaction tax [Section 10(38)]
- Income from international sporting event [Section 10(39)]
- Grants received by specified subsidiary company [Section 10(40)]
- Income of certain non - profit body or authority [Section 10(42)]
- Loan in the case of reverse mortgage [Section 10(43)]
- Income of New Pension System Trust [Section 10(44)]
- Any notified allowance or perquisite paid to the Chairman/retired Chairman or any other member/retired member of the UPSC [Section 10(45)]
- Exemption of specified income of notified body/ authority/trust/board/commission [Section 10(46)]
- Any income of a notified infrastructure debt fund set-up in accordance with prescribed guidelines [Section 10(47)]
- Income received by certain foreign companies in Indian currency for import of crude oil etc. [Section 10(48)]
- Tax exemption to National Financial Holdings Company Limited [Section 10(49)]
Other important exemptions
Apart from above discussed exemption of section 10 following is the list of other important exemptions:
- Section 10A provides for exemption in respect of income of newly established undertakings in free trade zone or electronic hardware technology park or electronic software technology park.
- Section 10AA provides for exemption in respect of income of newly established units in Special Economic Zones.
- Section 11 and 12 provide exemption in respect of income of a public charitable or religious trust.
- Section 13A provides exemption in respect of income of a political party.
- Section 13B provides exemption in respect of income of an electoral trust.
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