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List of Income that is Exempt from Income Tax

There are different income which are exempted from Income Tax in India. Since the formation of Indian Income Tax Act, 1961 government has exempted certain income from payment of Income tax and this list of exempted income is increasing from that day. One of the few reason for creating this list is to avoid double taxation of Income, second is to give the benefit to underprivileged and third is to give benefit to government employees posted outside and foreign diplomats posted in India. One of the main Income which is exempted from Tax is Income from Agriculture and other is dividend Income in hands of Shareholder on which company pays the dividend distribution tax directly.

In the following cases Income is exempt from Income tax:-

  1. Agriculture Income [Sec. 10(1)]
  2. Payments received from family income by a member of HUF [Sec. 10(2)]
  3. Share of profit from a firm [Sec. 10(2A)]
  4. Interest received by a non resident from prescribed securities [Sec. 10(4)]
  5. Interest received by a person who is resident outside India on amounts credited in the non-resident (External) account [Sec. 10(4)]
  6. Leave travel concession provided by as employer to his Indian citizen employee [Sec. 10(5)]
  7. Remuneration received by foreign diplomats of all categories [Sec. 10(6)]
  8. Salary received by a foreign citizen as an employee of a foreign enterprise provided his stay in India does not exceed 90 days [Sec. 10(6)(vi)]
  9. Salary received by a non-resident foreign citizen as a member of ship’s crew provided his total stay in India does not exceed 90 days [Sec. 10(6)(vii)]
  10. Remuneration received by an employee, being a foreign national, of a foreign government deputed in India for training in a Government establishment or public sector undertaking [Sec. 10(6)(xi)]
  11. Tax paid on behalf of foreign companies [Sec. 10(6A)]
  12. Tax paid by Government or an Indian concern in case of a non-resident / foreign company [Sec. 10(6B)]
  13. Income arising to notified foreign companies from services provided in or outside India in project connected with the security of India [Sec. 10(6C)]
  14. Foreign allowance granted by the Government of India to its employees posted abroad [Sec. 10(7)]
  15. Remuneration received from a foreign Government by an individual who is in India in connection with any sponsored co-operative technical assistance programme with a foreign Government and the income of the family members of such employee [Sec. 10(8)and(9)]
  16. Remuneration / fee received by non-received consultants and their foreign employees [Sec. 10(8A),(8B) and (9)]
  17. Death-cum-retirement gratuity [Sec. 10(10)]
  18. Commuted value of pension and any payment received by way of commutation of pension by as individual out of annuity plan of LIC or any other insurer from a fund set up by that corporation or insurer [Sec. 10(10A)]
  19. Leave salary [Sec. 10(10AA)]
  20. Retrenchment compensation [Sec. 10(10B)]
  21. Compensation received by victims of Bhopal gas leak disaster [Sec. 10(10BB)]
  22. Compensation from the Central Government or a state Government or a local authority received by an individual or his legal heir on account of any disaster [Sec. 10(10BC)]
  23. Compensation received from a public sector company at the time of voluntary retirement or separation [Sec. 10(10C)]
  24. Tax on perquisite paid by employer [Sec. 10(10CC)]
  25. Any sum (including bonus) on life insurance policy (not being a keyman insurance policy) [Sec. 10(10D)]
  26. Any amount from provident fund paid to retiring employee [Sec. 10(11)]
  27. Amount from an approved superannuation fund to legal heirs of the employee [Sec. 10(13)]
  28. House rent allowance subject to certain limits [Sec. 10(13A)]
  29. Special allowance granted to an employee [Sec. 10(14)]
  30. Interest from certain exempted securities [Sec. 10(15)]
  31. Payment made by an Indian company, engaged in the business of operation of an aircraft, to acquire an aircraft on lease from a foreign Government or foreign enterprise [Sec. 10(15A)]
  32. Scholarship granted to meet the cost of education [Sec. 10(16)]
  33. Daily allowance of a member of parliament or state Legislature (entire amount is exempt), any other allowance subject to certain conditions [Sec. 10(17)]
  34. Rewards given by the central or state Government for literary, scientific or artistic work or attainment or for service for alleviating or for service for alleviating the distress of the poor, the weak and the ailing, or for proficiency in sports and games or gallantry awards approved by the Government [Sec. 10(17A)]
  35. Pension and family pension of gallery award winners [Sec. 10(18)]
  36. Family pension received by family members of armed forces [Sec. 10(19)]
  37. National property income of any one place occupied by a former ruler [Sec. 10(19A)]
  38. Income from local authorities [Sec. 10(20)]
  39. Any income of housing boards constituted in India for planning, development or improvement of cities, town or villages [Sec. 10(20A)]
  40. Any income of an approved scientific research association [Sec. 10(21)]
  41. Income of specified non- agencies [Sec. 10(22B)]
  42. Any income (other than interest on securities income from property income received for rendering any specific services and income by way of interest or dividends) of approved professional bodies [Sec. 10(23A)]
  43. Any income received by any person on behalf of any regimental fund or non public fund established by the armed forces of the union for the welfare of the past and present members of the such forces or their dependents [Sec. 10(23AA)]
  44. Income of funds established for the welfare of employees [Sec. 10(23AAA)]
  45. Any income of the pension fund set by LIC or any other insurer approved by the controller of insurance or insurance Regulatory and development authority [Sec. 10(23AAB)]
  46. any income (other than business income) of a trust or a society approved by Khadi and village industries commission [Sec. 10(23B)]
  47. Income of an authority whether known as Khadi and village industries board or by any other name for the development of Khadi and village industries [Sec. 10(23BB)]
  48. Income of the European Economic Community derived in India by way of, interest, dividends or capital gains in certain cases [Section 10(23BBB)]
  49. Any income arising to anybody or authority established, constituted or appointed under any enactment for the administration of public religious or charitable trusts or endowments or societies for religious or charitable purposes [Section 10(23BBA)]
  50. Income of SAARC Fund for Regional Projects, set up by Colombo Declaration [Section 10(23BBC)]
  51. Any income of Secretariat of Asian Organisation of Supreme Audit Institutions [Section 10(23BBD)]
  52. Any income received by any person on behalf of specified national funds and approved public charitable trust or institution [Section 10(23C)]
  53. Income of Mutual Fund set up by — a public sector bank or a public financial institution [Section 10(23D)]
  54. Any income by way of dividend, or long term capital gains of venture capital funds and venture capital companies [Section 10(23F)]
  55. Income of a member of Scheduled Tribe, living in Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram from any source arising by reason of his employment therein and income by way of dividend and interest on securities [Section 10(26)]
  56. Any income accruing or arising to any resident of Ladakh from any source therein or out of India before the assessment year 1989-90, provided that such person was resident in Ladakh in the previous year relevant to the assessment year 1962-63 [Section 10(26A)]
  57. Any income of a statutory Central or State corporation or of a body/institution, financed by the Government formed for promoting the interest of Scheduled Castes/Tribes [Section 10(26B)]
  58. Income of co-operative society formed for promoting interests of members of Scheduled Castes/Scheduled Tribes [Section 10(27)]
  59. Income by way of subsidy from Tea Board for replanting or replacement of tea bushes or for the purpose of rejuvenation or consolidation of areas used for cultivation of tea in India [Section 10(30)]
  60. Subsidy received by planters of Rubber, Coffee, Cardamon [Section 10(31)]
  61. Income of a minor child up to Rs. 1,500 in respect of each minor child whose income is includible under section 64(1A) [Section 10(32)]
  62. Any income by way of Capital gains on transfer of US-64 units [Section 10(33)]
  63. Dividend on or after April, 2003 from domestic companies [Section 10(34)]
  64. Income on units of Mutual Funds on or after April 1, 2003 [Section 10(35)]
  65. Long term Capital gains on transfer of listed Equity Shares purchased during 1-3-2003 to 29-2-2004 [Section 10(36)]
  66. Capital gain to individual/HUF on compensation received on compulsory acquisition of urban agriculture land [Section 10(37)]
  67. Long term capital gain in some cases [Section 10(38)]
  68. Sum received without consideration from international sporting event held in India [Section 10(39)]
  69. Income of Industrial Units situated in trade-free zones, specified technology parks etc. [Section 10A]
  70. Income from specified 100% export oriented undertakings [Section 10B]
  71. Income from property held for approved charitable or religious purposes [Section 11]
  72. Specified Income of Registered political parties [Section 13A]

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19 thoughts on “List of Income that is Exempt from Income Tax
  • VENKAT RAO says:

    Dear Sir/Madam,

    Your web site excellent and who is searching tax information this is best web site

    Thanks & Regards

  • assisted living says:

    Awesome! Ultra enjoyable review. I am just saving this page without delay. Thanks much!

  • Anis Ahmed says:

    I would like to know what wll be the rate of tax for promotor of landed property?

    • admin says:

      Anis Ji, If you are holding the share of company then if you are selling the shares in company then capital gain rate of 20% if holding for more than 1 yrs (Equity Share) if you are holding the land then 20% capital gain tax on profit if holding for more than 3 yrs

  • TARUN CHOPRA says:

    what if i want some exemption in service tax,vat & other taxes in my bussiness.
    Is there any appliction form available in govt. of india office.

    • admin says:

      Tarun ji, For Service tax maximum exemption limit is Rs 10 lakhs and VAT Limit is Rs 2 Lakhs (depending on state to state) since VAT is governed by State VAT Acts
      There is no such application with Govt.

  • Dr Rana says:

    Sir ,
    Please tell me what does this statement means “The remuneration will be starting from INR 102,500/- per month onwards at FG 5, taxable as per Indian laws.” by WHO.

    • admin says:

      Dr Rana ji, It means remuneration which employee will receive will be taxed as per the Indian Income Tax Act, 1961
      Education Qualification/Experience:
      1.MBBS with at least two years experience in implementing public health programs OR MBBS with a post graduation in Preventive and Social Medicine/Pediatrics/Public Health. Physicians with relevant post-graduate degrees/diploma will be preferred;
      2. Knowledge of computer applications essential
      3. Strong analytic, networking and advocacy skills essential

      And As per section 10(8) and Section 10(9) of the Income Tax Act, Remuneration received from a foreign Government by an individual who is in India in connection with any sponsored co-operative technical assistance programme with a foreign Government and the income of the family members of such employee [Sec. 10(8)and(9)
      Details of Section 10(8), 10(8A) and 10(9)
      (8) in the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)—
      (a) the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and
      (b) any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State ;
      31[(8A) in the case of a consultant—
      (a) any remuneration or fee received by him or it, directly or indirectly, out of the funds made available to an international organisation [hereafter referred to in this clause and clause (8B) as the agency under a technical assistance grant agreement between the agency and the Government of a foreign State ; and
      (b) any other income which accrues or arises to him or it outside India, and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay any income or social security tax to the Government of the country of his or its origin.
      Explanation.—In this clause, "consultant" means—
      (i) any individual, who is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; or
      (ii) any other person, being a non-resident,
      engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project, provided the following conditions are fulfilled, namely :—
      (1) the technical assistance is in accordance with an agreement entered into by the Central Government and the agency ; and
      (2) the agreement relating to the engagement of the consultant is approved by the prescribed authority32 for the purposes of this clause ;
      (8B) in the case of an individual who is assigned to duties in India in connection with any technical assistance programme and project in accordance with an agreement entered into by the Central Government and the agency—
      (a) the remuneration received by him, directly or indirectly, for such duties from any consultant referred to in clause (8A) ; and
      (b) any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the country of his origin, provided the following conditions are fulfilled, namely :—
      (i) the individual is an employee of the consultant referred to in clause (8A) and is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; and
      (ii) the contract of service of such individual is approved by the prescribed authority32a before the commencement of his service ;]
      (9) the income of any member of the family of any such individual as is referred to in clause (8) 33[or clause (8A) or, as the case may be, clause (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 33[or, as the case may be, country of origin of such member];

      • Dr Rana says:

        Thanks for even getting to the source of the advertisement , As I told earlier this ad is from WHO . And after going through the answer i understand that the renumeration i will be getting will be taxable as per Indian Income tax laws, Can the Allowances which i will get in form of TA , HA etc will be exempted from the Income tax laws??

        • admin says:

          Dr. Rana, it includes any remuneration, which means whatever fees or remuneration you will receive will be exempted under income tax act

  • Kannan K says:

    I have a doubt. I will be grateful if you clarified me this..
    i have some amount of Shares allotted thro Rights issues for Employees. It was alloted to me at a price of Rs 20/- per share. Share application money was paid on Jan 2013 and Call money was paid on June 2013.
    what will the % of taz which i will have to pay if i sold some of my shares?

  • sriprakash says:

    I have sold shares in 2012-13FY. I purchased these shares gradually during the period 1988 to 2011. I do not have the records of the cost of purchase. How do I calculate the long term capital gains.Please let me know in this forum and also on my g mail account.
    Thanks

  • Vivek says:

    Dear Sir/Madam,
    I have completed 5 years in a company and got gratuity and have withdrawn my PF.
    Now do i need to fill the ITR-2 form ?
    What all is considered as Exempted income and in the Form ITR-2 where should i show this and against what point.
    Where do i enter my TDS deductions?

  • ankit says:

    interest on fixed deposit in NRE account is exempt?

  • rsy says:

    useful article.execellent.

  • mukesh says:

    Sir, I am working in MNC in gurgaon. At present I am in deputation for mere than 6 months to other country.
    So I am getting one salary from Indain office and some part I am getting from deputation from other country in which i am in deputation.
    Please let me know, is there any tax excemption for me in my salary which i am getting in India

  • Sandesh says:

    I do not have any salary. I have Defence disability pension. I also have interest income of Rs 4 lakhs. Since my pension is exempt from IT, how do i fill my tax ITR columns? Pl advice.