In India, the first Income Tax Act was introduced in 1860. It was implied by James Wilson to overcome heavy losses suffered by the British Government due to India’s freedom movement in 1857. The history of Income Tax in India is divided into 3 different periods: 1860-1885; 1886-1914; 1914 till date. If any tax is still due on the basis of return of income, after adjusting advance tax and tax deducted at source, the assessee has to pay such tax (called self-assessment tax) at the time of filing of the return. 1.7 Return of Income. The Income-tax Act, 1961 contains provisions for filing of return of income. The Income-tax Act, 1961. The Income-tax Act, 1961 is the charging Statute of Income Tax in India. It provides for levy, administration, collection and recovery of Income Tax. The Government of India brought a draft statute called the ' Direct Taxes Code ' intended to replace the Income Tax Act,1961 and the Wealth Tax Act, 1957. 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.
1. Agriculture 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:
2. Any sum received by a Co-parcener from Hindu Undivided Family (H.U.F.) [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.
Example-1. HUF earned `. 5,00,000 during the previous year and paid tax on its income. Mr. A, a co-parcener is an employee and earns a salary of `.20,000 p.m. During the previous year Mr. A also received `.1,00,000 from HUF. Mr. A will pay tax on his salary income but any sum of money received from his HUF is not chargeable to tax in Mr. A’s hands.
Example-2. HUF earned `.90,000 during the previous year 2016-17 and it is not chargeable to tax. Mr. A, a co-parcener is earning individual income of `. 20,000 p.m. Besides his individual income, Mr. A receives `.30,000 from his HUF.
Mr. A will pay tax on his individual income but any sum of money received by him from his HUF is not chargeable to tax in the hands of co-parcener whether the HUF has paid tax or not on that income.
3. Share of Income 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.4. Interest paid to Non-Resident [Section 10(4)(i)]
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 (q) of section 2 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account.
5. Interest to Non-Resident on Non-Resident (External) Account [Section 10(4)(ii)]
Any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India shall be exempt from tax in case of an individual who is a person resident outside India or is a person who has been permitted by the RBI to maintain the aforesaid account. The person residing outside India shall have the same meaning as defined under Foreign Exchange Regulation Act, 1973, FEMA, 1999. This exemption shall not be available on any income by way of interest paid or credited on or after 1-4-2005.
6. Interest paid to a person of Indian Origin and who is Non-Resident [Section 10(4 B)]
In case of an individual, being a citizen of India or a person of Indian origin, who is nonresident, any income from interest on such savings certificates issued by the Central Government, as Government may specify in this behalf by notification in the Official Gazette, shall be fully exempt. The exemption under this section shall not be allowed on bonds or securities issued on or after 1-6-2002.
This exemption shall be allowed only if the individual has subscribed to such certificates in Foreign Currency or other foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Act, 1973, FEMA, 1999 and any rules made there under.
For this purpose, a person shall be deemed to be of Indian origin if he or either of parents or any of his grandparents, was born in India or in undivided India.
7. Leave Travel Concession or Assistance (LTC/LTA) to an Indian Citizen Employee [Section 10(5)]
The employee is entitled to exemption under section 10(5) in respect of the value of travel concession or assistance received by or due to him from his employer or former employer for himself and his family, in connection with his proceeding—
The exemption shall be allowed subject to the following:
Exemption will, however, in no case exceed, actual expenditure incurred on the performance of journey.
HOW MANY TIMES CAN EXEMPTION BE CLAIMED?
Exemption available only in respect of two children
The exemption relating to LTC shall not be available to more than two surviving children of an individual after 1.10.1998.
Exception: The above rule will not apply in respect of children born before 1.10.1998 and also in case of multiple birth after one child.
8. Remuneration or Salary received by an individual who is not a citizen of India [Section 10(6)]
The following incomes are exempt when received by an individual who is not a citizen of India:
If the person mentioned above in (a) to (d) is a subject of the country represented, is not engaged in any business, profession or employment in India (otherwise than as a member of such staff), and the country represented gives similar concession to the members of the staff of corresponding officials of the Government of India.
(ii) Remuneration received by him as an employee of foreign enterprise [U/s 10(6)(vi)]
(e.g., technician deputed by a foreign firm to work in India), for service rendered by him during his stay in India provided the following conditions are fulfilled—
Any income chargeable under the head “Salaries” received by or due to any such individual being a non-resident, as remuneration for service rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate of a period of 90 days in the previous year.
(iv) Remuneration received by an employee of foreign govt. during his stay in India for his training in India [U/s 10(6)(xi)].
Such remuneration shall be fully exempted if he is taking training in any of the following concern :
9. Tax paid by Government or Indian concern on Income of a Foreign Company [Section 10(6A), (6B), (6BB) and (6C)]
(6A) :
Example. A foreign company renders technical services to an Indian company and as per agreement, foreign company is to be paid a fees of Rs. 1,00,000. Tax of Rs. 30,000 on such fees is also paid by the Indian company. Tax paid by Indian company will be exempt and so it will not be grossed up with the income of the foreign company and such foreign company’s income will be only Rs. 1,00,000.
(6B) :
The tax liability of a non-resident (Not being a company) or a foreign company if paid by an Indian concern or Government of India or a State Government the same will be exempted and so will not be grossed up with the income of the foreign entity.
(6BB) :
Tax paid on income received by foreign government or a foreign enterprise on leasing aircraft.
In case any income is received by a foreign government or a foreign enterprise from an Indian company which is engaged in the operation of aircraft and such income is by way of consideration of acquiring an aircraft or an engine of aircraft (other than payment for providing spares or services in connection with the operation of leased aircraft) on lease under an agreement entered into after 31-3-1996 but before 1-4-2007 and approved by the Central Government in this behalf, and the tax on such income is payable by such Indian company under the terms of agreement, the tax so paid shall be fully exempted.
This benefit shall be available only to that foreign enterprise which is non-resident.
(6C) :
Any income derived by a foreign company (so notified by Central govt.) by way of royalty or fees for technical services under an agreement for providing services in or outside India in projects connected with security of India shall be fully exempted.
10. Perquisites and Allowances paid by Government to its Employees serving outside India [Section 10(7)]
Any allowances or perquisites paid or allowed, as such, outside India by the Government to a citizen of India, for rendering services outside India, are exempt.
The following conditions have to be satisfied before such income is treated as deemed to accrue or arise in India:
While salary of Indian citizen in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Government to the above Indian citizens for their rendering services outside India are exempt under section 10(7).
11. Employees of Foreign Countries working in India under Cooperative Technical Assistance Programme [Section 10(8)]
The persons who are working in India under co-operative technical assistance programmes in accordance with an agreement entered into by the Central Government and the Government of a foreign State, the following incomes of such individuals shall be exempt provided the terms of agreements provide for such exemption
12. Income of a Consultant [Section 10(8A)]
Any remuneration or fee received by a consultant from an international organisation who derives its fund under technical assistance grant agreement between such organisation and the Foreign Government, and any other income accruing or arising to him outside India (which is not deemed to accrue or arise in India) and which is subject to income-tax or social security tax in foreign country, shall be fully exempted. The agreement of the service of consultant must be approved by the competent authority.
The consultant means :
Conditions laid down for Tax Exemption U/s 10(8A)
13. Income of Employees of Consultant [Section 10(8B)]
In case of an individual who is assigned duties in India under technical assistance programme—
Conditions laid down for Tax Exemption U/s 10(8B)
14. Income of any member of the family of individuals working in India under co-operative technical assistance programmes [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.
15. Gratuity [Section 10(10)]
Gratuity is a payment made by the employer to an employee in appreciation of the past services rendered by the employee. Gratuity can either be received by:
(a) the employee himself at the time of his retirement; or
(b) the legal heir on the event of the death of the employee.
Income Tax Bare Act
Gratuity received by an employee on his retirement is taxable under the head 'Salary' whereas gratuity received by the legal heir of the deceased employee shall be taxable under the head 'Income from other sources'. However, in both the above cases, according to section 10(10) gratuity is exempt upto a certain limit. Therefore, in case gratuity is received by employee, salary would include only that part of the gratuity which is not exempt under section 10(10).
A. 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).
B. Gratuity Received by a Non-Government Employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]
Minimum of the following 3 limits:
(1) Actual gratuity received, or (2) 15 days salary for every completed year, or part thereof exceeding six months 7 days salary for each season in case of employee in seasonal establishment; or (3) ₹. 10,00,000
Meaning of Salary:
(i) Basic salary plus dearness allowance. (ii) Last drawn salary. Average salary for preceding 3 months in case of piece rates employees (iii) No. of days in a month to be taken as 26 C. Any other Employee
Minimum of the following 3 limits:
(1) Actual gratuity received (2) Half months average salary of each completed year of service. (3) ₹. 10,00,000
Meaning of Salary:
(i) Basic Salary plus D.A. to the extent the terms of employment so provide Commission, if fixed percentage of turnover. (ii) Average salary of last 10 months preceding the month in which event occurs. (iii) Only completed year of service is to be taken.
16. Commuted value of Pension Received [Section 10(10A)]
17. Amount received as Leave Encashment on Retirement [Section 10(10AA)]
18. Retrenchment Compensation received by Workmen [Section 10(10B)]
Any compensation received by a workman at the time of his retrenchment, under the Industrial Disputes Act, 1947 or under:
shall be exempt to the extent of minimum of the following limits:
Compensation received in excess of the aforesaid limit is taxable and would, therefore, form part of Gross Salary. However, the assessee shall be eligible for relief under section 89 read with rule 21A.
19. Payment received under Bhopal Gas Leak Disaster (Processing of Claims) Act 1985 [Section 10 (10BB)]
Any amount received under the provision of such Act or any scheme framed there under shall be fully exempted but in case payment is received against a loss or damage, for which deduction has been claimed ealier, it shall be taxable.
19. Compensation received in case 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 capacity of community of the affected area
20. 'Retirement Compensation' from a Public Sector Company or any other Company [Section 10(10C)]
The compensation received or receivable by the employee of the following, on voluntary retirement, under the golden hand shake scheme, is exempt under section 10(10C):
Exemption shall be available, subject to the following conditions:
Quantum of Exemption:
whichever is less.
21. Tax on Non-monetary Perquisites paid by Employer [Section 10(10CC)]
The income-tax actually paid by the employer himself on a non-monetary perquisite provided to the employee shall be exempt in the hands of the employee.
22. Any sum received under a Life Insurance Policy [Section 10(10D)]
Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, is wholly exempt from tax. However, the following sum received are not exempt under this section:
23. Payment from Statutory Provident Fund [Section 10(11)]
24. Payment from Recognised Provident Fund [Section 10(12)]
The accumulated balance due and becoming payable to an employee participating in a recognised provident fund, is exempt to the extent provided in rule 8 of part A of the Fourth Schedule.
Notes:
1. 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.
2. Accumulated balance paid from a recognised provident fund will be exempt from tax in following cases:
(a) If the employee has rendered a continuous service of 5 years or more. If the accumulated balance includes amount transferred from other recognised provident fund maintained by previous employer, then the period for which the employee rendered service to such previous employer shall also be included in computing the aforesaid period of 5 years.
(b) If the service of employee is terminated before the period of 5 years, due to his ill health or discontinuation of business of the employer or other reason beyond his control.
(c) If on retirement, the employee takes employment with any other employer and the balance due and payable to him is transferred to his individual account in any recognised fund maintained by such other employer, then the amount so transferred will not be charged to tax.
Except above situations, payment from a recognised provident fund will be charged to tax considering such fund as un-recognised from the beginning (See note 3 given below for tax treatment of un-recognised provident fund).
3. Treatment of payment (at the time of termination) from un-recognised provident fund:
Payment on termination will include 4 things, viz., employee's contribution and interest thereto and employer’s contribution and interest thereto, the tax treatment of such payment is as follows:
· Employee's contribution is not chargeable to tax; interest on employee contribution is taxed under the head “Income from other sources”.
· Employer's contribution and interest thereon are taxed as salary income, however, an employee can claim relief under section 89 in respect of such payment.
25. Payment from Superannuation Fund [Section 10(13)]
Like Provident Fund, Superannuation fund is also a scheme of retirement benefits for the employee. These are funds, usually established under trusts by an undertaking, for the purpose of providing annuities, etc., to the employees of the undertaking on their retirement at or after a specified age, or on their becoming incapacitated prior to such retirement, or for the widows, children or dependents of the employees in case of the any employee's earlier death. The trust invests the money contributed to the fund in the form and mode prescribed. Income earned on these investments shall be exempt, if any such fund is an Approved Superannuation Fund.
Tax treatment: The tax treatment as regards the contribution to and payment from the fund is as under:
Employee's contribution:Deduction is available under section 80C from gross total income.
Employer's contribution: Contribution by the employer to the approved superannuation fund is exempt upto ₹1,50,000 per year per employee. If the contribution exceeds ₹1,50,000 the balance shall be taxable in the hands of the employee.
Interest on accumulated balance: It is exempt from tax.
Payment from the fund: Any payment from an approved superannuation fund shall be exempt if it is made:
26. House Rent Allowance-HRA [Section 10(13A) Read with Rule 2A]
Quantum of Exemption: Minimum of following Three limits:
27. Any Allowance given for meeting Business Expenditure [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:
28. Interest Incomes [Section 10(15)]
Interest incomes which are exempt under section 10(15) could be explained with the help of the following table-
29. Scholarship [Section 10(16)]
The full amount of scholarship granted to meet the cost of education is exempted.
‘Cost of education’ includes not only the tuition fees but all other expenses which are incidental to acquiring education. Scholarship may have been given by Govt., University, Board, Trust, etc. The exemption is irrespective of actual expenditure incurred by the recipient to meet the cost of education.
30. Allowance of M.P./M.L.A.Ior M.L.C. [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 StateLegislature or by member of any committee thereof.
31. Awards Instituted by Government [Section 10(17A)]
Any payment received in pursuance of following (whether paid in cash or in kind) is exempt from tax:
32. Pension received by certain winners of gallantry awards [Section 10(18)]
33. Family pension received by family members of armed forces including para military forces [Section 10(19)]
With effect from the 1st day of April, 2005 family pension received by the widow or children or nominated heirs, as the case may be, of a member of the armed forces (including paramilitary forces) of the Union, where the death of such member has occurred in the course of operational duties, in such circumstances and subject to such conditions, as may be prescribed shall be fully exempted
34. Income of a Local Authority [Section 10(20)]
The following income of a local authority is exempt from tax:
35. Income of Scientific Research Association [Section 10(21)]
Any income of a research association, approved under section 35(1)(ii)/(iii) is exempt from tax, if following conditions as specified in section 10(21) are satisfied:
Note:
1. Exemption shall not be denied in relation to voluntary contribution [other than voluntary contribution in cash or voluntary contribution of the nature referred to in (i), (ii), (iii) or (iv) supra]subject to the condition that such voluntary contribution is not held by the research association otherwise than in any one or more of the forms or modes specified in subsection (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired. 2. Exemption is not available in relation to any income of the research association, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business 36. Income of a News Agency [Section 10(22B)]
In case there is any income of a news agency set up solely in India for collection and distribution of news and which is so notified in this behalf shall be fully exempted provided such income or accumulated income is used solely for collection and distribution of news and not to be distributed in any manner amongst its members.
The approval given under this section shall be withdrawn if the news agency has not applied, accumulated or distributed its income in accordance with the prescribed conditions, the notification issued under this section shall be cancelled
37. Income of some Professional Institutions [Section 10(23A)]
Any income (other than income from house property and income from rendering any specific service or income by way of interest or dividend on investment) of an professional institution/association is exempt from tax, if the following conditions are satisfied:
38. Exemption of Income Received by Regimental Fund [Section 23AA]
Any income received by any person on behalf of any Regimental Fund or Non Public Fund established by the armed forces of India for the welfare of the past and present members of such forces or their dependents shall be exempted from tax
39. Income of a Fund set-up for the welfare of employees or their dependents [Section 10(23AAA)]
Any income of such fund which is approved by Conmiissioner of Income-tax shall be fully exempted provided its income is applied wholly and exclusively for the objects for which it is established.
The CBDT has notified following purposes for which the fund is expected to help its members or their dependents—
40. Income of a pension fund set up by LIC or other insurer [Section 10(23AAB)]
Income of an institution constituted as a public charitable trust or society which is established for the development of khadi and village industries (not for profit purpose) is exempt from tax, if following conditions are satisfied:
41. Income of State Level Khadi and Village Industries Board [Section 10(23BB)]
Any income from an authority (whether known as the Khadi and Village Industries Board, or by any other name) established in a State by or under a State or Provincial Act for the development of Khadi or Village Industries in the State, shall be exempted from tax
42. Income of certain Authorities set up to manage Religious and Charitable Institutions [Section 10(23BBA)]
Any income of any body or authority established, or appointed by or under any Central, State or Provincial Act which provides administration of any of the following institutions
43. Income of European Economic Community [Section 10(23BBB)]
Any income of European Economic community derived in India by way of interest, dividend or capital gain from investments made out of its funds under such scheme as the Central Govt. may notify is fully exempted.
44. Income of a SAARC Fund for regional projects [Section 10(23BBC)]
Any income of a fund set up as SAARC Fund for Regional Projects set up by Colombo Declaration issued on 21st. Dec. 1991 by Heads of State or Government of the Member Countries of South Asian Association for Regional Co-operation shall be fully exempted.
45. Any income of Insurance Regulatory and Development Authority [Section 10(23BBE)]
Any income of Insurance Regulatory and Development Authority established under Insurance Regulatory and Development Authority Act 1999 shall be fully exempted
46. Income of Prasar Bharti [Section 10(23BBH)] [Inserted by the Finance Act 2012, w.e.f. 2013-14]Any income of the Prasar Bharti (Broadcasting Corporation of India) established under section 3(1) of the Prasar Bharti (Broadcasting Corporation of India) Act, 1990, shall be exempt.47. Any income received by a person on behalf of following Funds [Section 10(23C)]
Any income received by any person on behalf of the Prime Minister’s National Relief Fund, the Prime Minister’s Fund (Promotion of Folk Art) or the Prime Minister’s Aid to Students Fund is exempt from tax under clause (i), (ii) and (iii) of section 10(23C) respectively.
The above exemption shall not be available for the profits and gains of any business which is carried on, on behalf of or by any fund or institution referred in points (iv) and (v) above or to the profits or gains of any business undertaking held under trust for the purposes of any fund or institution referred in points (iv) and (v) above. This amendment has come into effect from assessment year 1984-85.
In case annual receipts of such an institution exceeds ` 1 crore in a previous year, it has to file an application upto 30th September in the succeeding financial year. Under Section 10(23C) income of institutions specified above shall be exempt from income tax. In certain cases, approvals are required to be taken from prescribed authority in the prescribed manner to became eligible for claiming exemption. 48. Income of Mutual Fund [Section 10(23D)]
Any income of following mutual funds (subject to provisions of sections 115R to 115T) is exempt from tax:
49. Exemption of income of a securitisation trust [Section 10(23DA)j [w.e.f. A.Y. 2014-15]
Any income of a securitisation trust from the activity of securitisation shall be exempt.
50. Income of Investor Protection Fund [Section 10(23EA)]
Any income by way of contributions received from recognised stock exchanges and the members thereof, of a notified Investor Protection Fund set up by recognised stock exchanges in India is exempt from tax.
Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a recognised stock exchange, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax
51. Exemption of income of investor protection fund of depository [Section 10(23ED)] [w.e.f. A.Y. 2014-15]
Any income, by way of contributions received from a depository, of notified Investor Protection Fund set up by a depository in accordance with the regulations made under the SEBI Act and Depository Act is exempt from tax
Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part with a depository, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall, accordingly, be chargeable to income-tax.
52. Exemption for Certain Incomes of a Venture Capital Company or Venture Capital Fund from Certain Specified Business or Industries [Section 10 (23FB)]
As per this amendment, the exemption will now be available only in respect of income of a Venture Capital Company or Venture Capital Fund from investment in a venture capital undertaking engaged in certain specified businesses or industries.
New definition of “Venture Capital Company”, “Venture Capital Fund” and “Venture Capital undertaking” [Explanation 1 of section 10 (23FB)] [w.e.f A.Y. 20 13-14]
53. Income of Registered Trade Unions [Section 10(24)]
The following incomes of registered trade unions are exempt from tax :
The trade union must be a registered one and formed primarily for the purpose of regulating the relations between workmen and employer or between workmen and workmen. This benefit shall also be available to an association of registered trade unions.
54. Income of Provident and Superannuation Funds [Section 10(25)]
55. Income of Employee’s State Insurance Fund [Section 10 (25A)]
Income of such fund is fully exempted.
56. Income of Schedule Tribe Members [Section 10(26) and 10(26A)]
Certain types of incomes of the members of Scheduled Tribes living in tribal areas are exempt from tax. The Scheduled Tribes to which this exemption applies are defined in Clause (25) of Article 366 of the Constitution, residing in any areas specified in Part A or Part B of the table appended to paragraph 20 of the Sixth Schedule of the Constitution or in the State of Arunachal Pradesh, Manipur, Tripura, Mizoram and Nagaland or in the Ladakh region of the State of Jammu & Kashmir.
The exempted incomes are incomes which accrue or arise to him :
This means that if a member of a Schedule Tribe sets up a business at any place other than mentioned above, profit from such business will be taxable.
57. Income of Sikkimese individual [Section 10(26AAN] (With retrospective effect from 1-4-1990)
The following incomes which accrues or arises to a Sikkimese individual shall be exempt from income tax—
This exemption will not be available to a Sikkimese women who, on or after 1-4-2008 marries a non-Sikkimese individual.
58. Regulating the marketing of agricultural produce [Section 10[26AAB]
Any income of an agricultural produce market committee or board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce shall be exempted.
59. Income of a corporation set-up for promoting the interests of Scheduled Castes, Scheduled Tribes or Backward Classes [Section 10(26B)]
Income of such corporation or body, institutions or associations which are wholly financed by govt. and which have been set-up to promote the interest of above mentioned communities shall be fully exempted.
60. Income of a corporation set-up to protect the interests of Minorities [Section 10(26BB)]
Any income of a corporation established by the Central Government or State Government for promoting the interests of the members of such minority community as notified by the Central Government from time-to-time, is exempt from tax under Section-10(26BB).
61. Any income of a Corporation established for Ex-Servicemen [Section 10(26BBB)]
From assessment year 2004-05, any income of a statutory corporation established by Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen (being citizen of India) is exempt from tax under section 10(26BBB).
“Ex-Serviceman” means a person who has served in any rank, whether as combatant or non-combatant, in the armed forces of the Union or armed forces of the Indian States before the commencement of the Constitution (but excluding the Assam Rifles, Defence Security Corps, General Reserve Engineering Force, Lok Sahayak Sena, Jammu and Kashmir Militia and Territorial Army) for a continuous period of not less than six months after attestation and has been released, otherwise than by way of dismissal or discharge on account of misconduct or inefficiency, and in the case of a deceased or incapacitated ex-serviceman includes his wife, children, father, mother, minor brother, widowed daughter and widowed sister, wholly dependant upon such ex-serviceman immediately before his death or incapacitation.
62. Income of cooperative society looking after the interests of Scheduled Castes or Scheduled Tribes or Both [Section 10(27)]
Such income shall be fully exempted provided the membership of such society consists of only other cooperative societies formed for similar purposes and the finances of the society are provided by Government and such other societies.
63. Any income accruing or arising to Commodity Boards etc. [Section 10(29A)]
Any income accruing to
64. Amount received as subsidy from or through the Tea Board [Section 10(30)]
In the case of a taxpayer, who carries on business of growing and manufacturing tea in India, the amount of any subsidy received from or through the Tea Board under the notified scheme for replantation or replacement of tea bushes or for rejuvenation or consolidation of the area used for cultivation of tea, is exempt from tax (for notified schemes see Notification No. S.O. 3616, dated September 27, 1976).
To claim exemption, a certificate from the Tea Board as to the amount of subsidy paid to the taxpayer during the year is to be obtained.
A similar exemption is available under section 10(31) in respect of subsidy received by an taxpayer engaged in the business of growing and manufacturing rubber, coffee, cardamom or such other commodities as the Central Government may by notification specify [Section 10(31)]
65. Amount received as subsidy from or through the concerned Board [Section 10(31)]
Any amount received as subsidy from or through the concerned Board for replantation or replacement of Rubber, Coffee, cardamom plants or plants for growing of such other commodities or for any other scheme so notified shall be fully exempted.
66. Income of Child Clubbed U/s 64 (IA) [Section 10(32)]
In case income of a minor child is clubbed with the income of his parent, the parent can claim exemption upto actual income of child clubbed or 1,500 whichever is less in respect of each minor child whose income is included.
67. Income by way of dividend from Indian company [Section 10(34)]
Dividend received from a domestic company is exempt in the hands of the shareholders provided such dividend has already suffered Dividend Distribution Tax (DDT) under section 115-O
68. Exemption of income to a shareholder on buyback of shares of unlisted company [Section 10 (34A) [w.e.f. A.Y. 2014-15]
Any income arising to an assessee being a shareholder, on account of buyback of shares, (not being listed on a recognised stock exchange) by the company as referred to in section 115QA shall be exempt.
69. Exemption of income from Units [Section 10(35)]
Like in case of dividend, section 10(35) provides that any income received in respect of—
shall be Exempt.
70. Exemption of income from Securitisation Trust [Section 10(35A)] [w.e.f A.Y. 2014-15]
Any income received by any person being an investor of the Securitisation Trust from such a trust, by way of distributed income referred to in section 115TA shall be exempt.
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71. Capital Gain on compulsory acquisition of urban Agricultural Land [Section 10(37)]
With a view to mitigate the hardship faced by the farmers whose agricultural land situated in specified urban limits has been compulsorily acquired, the Finance (No. 2) Act, 2004 has inserted a new clause (37) in section 10 so as to exempt the capital gains (whether short-term or long-term) arising to an individualor a Hindu undivided family from transfer of agricultural land by way ofcompulsory acquisition where the compensation or the enhanced compensation or consideration, as the case may be, is received on or after 1.4.2004. The exemption is available only when such land has been used for agricultural purposes during the preceding two years by such individual or a parent of his or by such Hindu undivided family.
Where the compulsory acquisition has taken place before 1.4.2004 but the compensation is received after 31.3.2004, it shall be exempt. But if part of the original compensation in the above case has already been received before 1.4.2004, then exemption shall not be available even though balance original compensation is received after 31.3.2004.
However, enhanced compensation received on or after 1.4.2004 against agricultural land compulsory acquired before 1.4.2004 shall be Exempt.
72. Income from international Sporting event [Section 10(39)]
Any specified income (which is from such international event and which is notified by the Central Govt.) of specified persons from any international event held in India shall be fully exempted if
73. Exemption of ‘specified income’ of certain bodies or authorities [Section 10(46)]
Any 'Specified Income' arising to a body or authority or Board or Trust or Commission (by whatever name called) which—
74. Exemption of Income of a foreign company from sale of Crude Oil in India [Section 10 (48)]
Any income of a foreign Co. received in India in Indian currency on account of sale of crude oil to any person in India shall be exempt if the following conditions are satisfied
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