Exempted Incomes Under Sec. 10 of the Income Tax Act,1961

[Exempted Incomes, Exempted Incomes Under Sec. 10 of the Income Tax Act 1961, Section 10 of the Income Tax Act, List of Exempted Incomes]

List out various incomes which are exempted from Income tax under Sec. 10.

1. Agricultural Income: 

Income from agriculture is exempt. However, if the net agricultural income exceeds Rs.5, 000, it is taken into account for determining the rates of income-tax on incomes liable to tax. [Sec.10 (1)]

2. Receipt from Hindu Undivided Family: 

Any sum received by an individual as a member of Hindu Undivided Family where such sum has been paid out of the income of the family or in the case of any Impartible estate, where such sum has been paid out of the income of the estate belonging to the family, irrespective of whether tax is payable or not by the HUF on its total income. However, certain receipts from HUF are liable to be clubbed in the hands of an individual member u/s 64(2). [Sec.10 (2)]

3. Partner’s Share in the Firm’s Income:

In the case of a person being a partner of a firm which is separately assessed as such, partner’s share in the total income of the firm is exempt. Share of a partner of the firm shall be computed by dividing the total income of the firm in the profit-sharing ratio mentioned in the Partnership Deed. [Sec.10 (2A)]

4. Value of Leave Travel Concession: 

Value of any leave travel concession or assistance received by or due from the employer to the employee (including noncitizens) and his family (spouse, children and dependent- father, mother, brother, sister dependent on him) in connection with his proceeding on leave or after retirement or termination of his service to any part of India. [Sec.10 (5)]

5. Leave Encashment: 

Any payment received by a Central/State Govt. employee, as cash equivalent of leave salary in respect of a period of earned leave at his credit at the time of his retirement whether o superannuation or otherwise. However, in the case of other employees, the exemption is available subject to specified limits. For details see ‘Receipts Exempt from Income Tax’ in the chapter ‘Salary’. [Sec.10 (10AA)]

6. Compensation to Employee: 

Any compensation received by a workman under Industrial Disputes Act or under any other Act or rules, order or notification issued there under or under any standing order or under any award, contract of service or otherwise at the time of his retrenchment is exempt to the extent such compensation is in accordance with Section 25F (b) of Industrial Disputes Act, subject to a maximum of Rs.5, 00,000.

7. Payment from Provident Fund: 

Any payment (including interest) from a provident fund under the Provident Fund Act, 1925 or Public Provident Fund Scheme, 1968. [Sec.10 (11)]

8. Payment from Sukanya Samriddhi Account: 

Any payment from an account under the Sukanya Samriddhi Account Rules, 2014 [Sec.10 (11A)]

9. Accumulated Balance of Recognised Provident Fund: 

Any accumulated balance due and becoming payable to an employee from a recognised provident fund, on fulfillment of any of the following conditions:

(i) If he has rendered a continuous services of five years or more; or

(ii) If his service, though not as stated in (i) above, has been terminated due to his ill-health or by the contraction or discontinuation of his employer’s business or any other cause beyond his control; or

(iii) If on cessation of his employment, his accumulated balance is transferred to a recognised provident fund maintained by his new employer;

10. House Rent Allowance: 

Any special allowance granted to an assessee by the employer to meet expenditure incurred on payment of rent for residential accommodation subject to prescribed limits and conditions. [Sec.10 (13A)]

11. Allowances of MPS and MLAs:

(a) Any daily allowance received by Members of Parliament or any State Legislature.

(b) Any allowance received by any Member of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986.

(c) Any constituency allowance received by any member of any State Legislature under any Act or rules made by it. [Sec.10 (17)]

12. Income of a Professional Association

Income of a Professional Association set up for the control, supervision, regulation or encouragement of the professions of law, medicine, accountancy, engineering, architecture or other notified profession (i.e. Company Secretary, Chemistry, Materials Management and Town Planning), subject to specified conditions. [Sec.10 (23A)]

13. Income of a News Agency

Income of a News Agency [i.e. Press Trust of India Ltd.] set up in India, which applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner to its members. [Sec.10 (22B)]

14. Income of a Minor Child

Income of a Minor Child liable to be included in the income of his parent u/s 64(1A) is exempted up to a maximum of Rs.1, 500 per minor child. [Sec.10 (32)]

15. Income Arising from compulsory acquisition of an agricultural land in urban areas

Any Capital gain arising to an individual /HUF on compulsory acquisition of an agricultural land in urban areas (i.e. situated within the jurisdiction of a municipality or a cantonment board having a population of 10,000 or more or within a specified distance from the local limits of such municipality/board), provided the compensation/consideration is received on or after 1.4.2004 and the land was being used for agricultural purposes by the HUF/individual or his parent(s), during the period of two years immediately before acquisition. [Sec.10 (37)]

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