Presentation on Income

Exempted From Income

Tax
BY-YATIN
Income Exempted For Employees
1. Section 10(13a)-HRA Exemption

(a)  Persons living in Rented House –Any amount of House Rent Allowance (HRA) received
by the employee form his employer is exempt up to the least of the following limits :
(i)  excess of actual Rent paid over 10% of Salary.
(ii)  an amount equal to 50% of Salary where such accommodation is situated in any
one of the following places, namely, Mumbai, Kolkata, Delhi, Chennai and 40% of Salary in
other towns ; or
(iii) actual amount of House Rent Allowance received.

(b)  Person living in their own houses or not paying any rent but getting HRA : Full HRA
received is taxable. NO exemption under this provision.
2. Section 10(10A)-Commutation Of Pension

• The full amount is Exempted if it is received from the Government

, a Local Authority or a Statutory corporation
• It does not exceed the following limit if any payment in
commutation of person receive under any scheme from any other
employer:
• in case where the employee receives any Gratuity, then
commuted value of 1/3rd  of Pension he receive ; and
• in any other case the commuted value of ½ such pension.
3. Section 10(10AA)-Leave Encashment
Exemption

• Central & State Government Employee – any payment received as leave

salary in respect of the earned leave at his credit at the time of his
retirement shall be fully exempt
• Other employees – any payment received as the cash equivalent of the
leave salary at his credit at the time of superannuation shall be exempt up
to least of  the following four amounts :
(a) Actual amount received.
(b) Amount calculated at average salary of 10 months
(c) Cash equivalent to Leave Salary due at the time of retirement.
(d) Notified Limit – Rs.3,00,000
4. Section 10(11)-Payment From Statutory
Provident Fund

• Any amount withdrawn from the Statutory Provident Fund is

exempt from tax. This provision is applicable on Public Provident
Fund also.
5. Section 10(10B)-Retrenchment compensation
paid to workmen

• Compensation received by a workman at the time of retrenchment

is exempt from tax to the extent of the lower of the following :
• Amount calculated in accordance with the provisions of Sec 25F(b)
of the Industrial Dispute Act, 1947 ; or
• Such amount as notified by the Government ( i.e. Rs.5,00,000 ) or
• The amount received.
•                                                      
Income Exempted For Institution
1. Section10(20)-Income of a local authority

•  The following types of incomes in the hands of a local authority

are exempt from tax---
• “Income from house property”,
• “Capital gains” or
• “Income from other sources” or from a trade or business carried
on by it which accrues or arises from the supply of a commodity or
service
2. Section 10(22B)-Income of News Agency

• any income of such news agency set up in India solely for

collection and distribution of news as the Central Government
may, by notification in the Official Gazette, specify in this behalf.
3. Section 10(23A)-Income of some
Professional Institutions

• any income of an association or institution established in India

having as its object the control, supervision, regulation or
encouragement of the profession of law, medicine, accountancy,
engineering or architecture or such other profession  as the
Central Government may specify in this behalf, from time to time,
by notification in the Official Gazette.
4. Section 10(23BB)-Income of Khadi and
Village Industries Board

• any income of 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.
5. Section 10(23AAB)–Income of pension fund
set-up by L.I.C. of India

• The life insurance corporation of india on or after 1st august, 1996,

under a pension scheme
• Any other insurer under a pension scheme to which contribution is
made by any person for receiving pension from such fund and
which is approved by the controller of insurance
Income Exempted For Assesses
1. Section 10(1)-Agriculture Income
Exemption

• As per section 10(1), agricultural income earned by the taxpayer in

India is exempt from tax. Any rent or revenue derived from land
used for agricultural purposes or agricultural produce to sell in the
market.
• Any income from farm house subject to certain satisfactory
conditions specified in section 2(1A) would be exempt.
2. Section 10(2a)–Share of profit from
Partnership Firm

• 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.
3.Section 10(39)-Income from international
sporting event

• 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;
• Such event is approved by the international body regulating the
international sport relating to such event.
• It has participation by more than two countries; and
• is notified by the Central Govt. in this regard.
4. Section 10(40)-Income received as grant by a subsidiary
company

• Income of any subsidiary company by way of grant or otherwise received

from its Indian holding company which is engaged in the business of
generation/ transmission/distribution of power is exempt, only if;
• Such receipt is for settlement of dues in connection with reconstruction
• Or revival of an existing business of power generation.
• The exemption is available if the reconstruction or revival is by way of
transfer of business to the Indian company notified under section 80
IA(4)(v)(a).
• Under section 10(41), any capital gain arising in the above case is not
chargeable to tax, if the transfer has taken place before April 1, 2006.
5. Section 10(45)-Exemption of Allowance or
perquisite to chairman/member of UPS

• Any allowance or perquisite, as may be notified by the Central

Government in the Official Gazette, in this behalf, paid to the
chairman or a retired chairman or any other member or retired
member of the Union Public Service Commission, shall be exempt.
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