CHETHAN.

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Department of Management, AIGS

INCOME TAX-I
CHAPTER-2: EXEMPTED INCOMES

INTRODUCTION

Based on the nature of income earned by the assessee (i.e., whether revenue or capital), the
next step in the process of making assessment is to identify whether the incomes are taxable
or exempt.

The taxability of an income is ascertained with the help of the Golden Rule of Income Tax,
which states that-

“ALL REVENUE RECEIPTS ARE TAXABLE UNLESS SPECIFICALLY EXEMPT”

AND

“ALL CAPITAL RECEIPTS ARE EXEMPT UNLESS SPECIFICALLY TAXABLE”

EXEMPT INCOME
Income that is non-taxable is called as exempt income. Under Section 10, there are different
sub-sections that define what kind of income is exempt from tax. This can range from
agricultural to house rent allowance.

Any income that an individual acquires or earns during the course of a financial year that is
deemed to be non-taxable is referred to as 'Exempt Income'. As per the Income Tax Act, there
are specific kinds of income that are exempt from tax as long as these types of income fulfil
the guidelines and provisions outlined in the Act. Exempt income comes in many forms such
as the interest received through agricultural means, interest received through PPF, long
term capital gains earned through shares and stocks, and much more. However, there is still
some debate on what exactly constitutes 'exempt income', and if such income is required to
be declared by the taxpayer when filing his or her income tax returns.

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Department of Management, AIGS

INCOMES EXEMPTED UNDER SECTION 10

Most income that is exempted from tax is listed under Section 10 of the Income Tax Act.
This section contains a list of income that is deemed or considered to be free from taxation.

Exempted income specified under Section 10 is as follows:

Sl. No SECTION EXEMPTIONS

1 Section 10(1) Income earned through agricultural means

2 Section 10(2) Any amount received by an individual through a coparcener from an HUF

3 Section 10(2A) Income received by partners of a firm, as shared between them

4 Section 10(4)(i) Any interest that has been paid to a person who is not a resident Indian

5 Any interest that has been paid to the account of a person who is not a
Section 10(4)(ii)
resident Indian

6 Any interest that has been paid to a person who is not a resident Indian, but
Section 10(4B)
of Indian origin

7 Section 10(5) Concession on travel given to an employee who is also a citizen of India

8 Section 10(6) Any income earned or received by a non-Indian citizen

9 Section 10(6A),
Government tax paid on the income of a foreign firm
(6B), (6BB), (6C)

10 Section 10(7) Allowances received by government employees stationed abroad

11 Income earned by foreign employees in India under the Cooperative

Section 10(8)
Technical Assistance Program

12 Section 10(8A) Income earned by a consultant

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Department of Management, AIGS

13 Section 10(8B) Income earned by a consultant's staff or employees

14 Income earned by any family member of a foreign employee in India under

Section 10(9)
the Cooperative Technical Assistance Program

15 Section 10(10) Gratuity

16 Section 10(10A) The commuted value of the pension earned by an individual

17 Section 10(10AA) Any amount earned via encashment of leave at the time of retirement

18 Section 10(10B) Compensation paid to workers due to relocation

19 Section 10(10BB) Any remittance obtained as per the Bhopal Gas Leak Disaster Act 1985

20 Section 10(10BC) Any compensation obtained in the event of a disaster

21 Section 10(10C) Compensation in lieu of retirement from a PBC or any other firm

22 Section 10(10CC) Any income received through taxation on perquisites

23 Section 10(10D) Any amount acquired via a Life insurance policy

24 Section 10(11) Any payment received via the Statutory Provident Fund

25 Section 10(12) Any payment received via a recognised or authorised Fund

26 Section 10(13) Any payment received through a Superannuation Fund

27 Section 10(13A) House Rent Allowance

28 Section 10(14) Allowances utilised to meet business expenses

29 Section 10(15) Income received in the form of interest

30 Section 10(15A) Income received by an Indian firm through the lease of an aircraft from a

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Department of Management, AIGS

foreign firm or government

31 Section 10(16) Income in the form of a scholarship

32 Section 10(17) Allowances granted to MLCs, MLAs or MPs

33 Section 10(17A) Income received in the form of a government award

34 Section 10(18) Income received in the form of pension by winners of awards for heroism

35 Income received by family members of the armed forces in the form of

Section 10(19)
pension

36 Section 10(19A) Income received from a single palace of an exruler

37 Section 10(20) Income received by a localised body or authority

38 Section 10(21) Income received by an association involved with scientific research

39 Section 10(22B) Income earned by a news or broadcasting agency

40 Section 10(23A) Income earned by certain Professional Institutes

41 Section 10(23AA) Income acquired through Regimental Fund

42 Section
Income acquired through an employee welfare fund
10(23AAA)

43 Section 10(23MB) Insurance pension fund income

44 Section 10(23B) Income earned by village industry development institutions

45 Section 10(23BB) Income earned by state level Khadi and Village Industries Board

46 Section Income earned by regulatory bodies of institutions affiliated with religion

10(23BBA) and charity

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Department of Management, AIGS

47 Section
Income received by the European Economic Community
10(23BBB)

48 Section
Income received through SAARC funded regional projects
10(23BBC)

49 Section
Income received by the IRDA
10(23BBE)

50 Section
Income received through Prasar Bharti
10(23BBH)

51 Section 10(23C) Income received by any individual through certain specified funds

52 Section 10(23D) Income earned via Mutual Funds

53 Section 10(23DA)j Income earned via a Securitisation Trust

54 Section 10(23EA) Income earned through an IPF

55 Section 10(23EB) Income received by the Credit Guarantee Trust for Small Industries

56 Section 10(23ED) Income exemption of IPF

57 Section Income exemption of specified income received by Venture Capital Firms,

10(23DFB) Funds or Businesses

58 Section 10(24) Income earned by authorised trade unions

59 Section 10(25) Income earned via provident funds and superannuation funds

60 Section 10(25A) Income earned via Employee's State Insurance Fund

61 Section 10(26),
Income earned by Schedule Tribe Members
10(26A)

62 Section Income earned by an individual of Sikkimese origin

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Department of Management, AIGS

10(26AAN)

63 Section
Marketing regulation with regards to agricultural produce
10(26AAB)

64 Income earned by corporations established for the upliftment of backward

Section 10(26B)
tribes and classes

65 Income earned by corporations established for the protection of Minority

Section 10(26BB)
interests

66 Section
Income earned by corporations established for former servicemen
10(26BBB)

67 Income earned by cooperative societies established for protection of

Section 10(27)
scheduled castes and tribe’s interests

68 Section 10(29A) Income received by Community Boards

69 Section 10(30) Income earned in the form of subsidies via the Tea Board

70 Section 10(31) Income earned in the form of subsidies via the concerned Board

71 Income earned by a child in accordance with Section 64 of the Income Tax

Section 10(32)
Act

72 Section 10(33) Income earned through Unit Trust of India capital asset transfer

73 Section 10(34) Income earned in the form of dividends through an Indian firm

74 Section 10(34A) Income earned by a shareholder through the buyback of unlisted companies

75 Income received through the sale or transfer of Unit Trust of India units as
Section 10(35)
well as other mutual funds

76 Section 10(35A) Income from a securitisation trust that is exempt

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Department of Management, AIGS

77 Section 10(36) Income received on the sale of shares under specific conditions

78 Any capital gains made on the mandatory acquirement of land in relation to

Section 10(37)
urban agriculture

79 Any long term capital gains made from share and security transfers that fall
Section 10(38)
under the purview of Security Transaction Tax

80 Any income received from any international event or function relating to

Section 10(39)
sports

81 Any income acquired in the form of a grant from a company deemed to be

Section 10(40)
a subsidiary of the parent company

82 Any income received on any asset transfer of a company or project that

Section 10(41)
conducts power distribution, generation and transmission

83 Any income earned by any authority that has been established by more
Section 10(42)
than one country

84 Section 10(43) Any income in relation to reversal of mortgage

85 Section 10(44) Income generated through the NPS Trust

86 Any allowance or perks granted to the chairman or any member of the

Section 10(45)
UPSC

87 Any income that comes under the category of 'specified income' with
Section 10(46)
regards to specific authoritative bodies

88 Section 10(47) Any income that is exempt under the category of infrastructure debt fund

89 Any income earned by a foreign firm or company due to crude oil sales
Section 10(48)
within India

90 Section 10(49) Any income earned by the NFHC (National Finance Holdings Company)

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