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EXEMPTIONS[ CHAPTER-III]
Chapter III – Income which do not form
part of total income
Why exemptions ?
Receipts which are not real income not to bear tax 3,5,7,9,13A,14,16,17
Labour welfare of common man 10 to 10C, 11, 12,12,23A,23AAA, 23AAB, 24,25 etc
Education 23A
Concerning the economy 4, 4B, 5B, 6 – 6C, 10D, 14A, 15A, 20A, 23BBB, 23BBC,
23D, 23E, 23F, 23G
Education, science, research, achievements, rewards, 16,17A,17B, 18, 21, 22,22A etc
sports, charity
Betterment of SC, ST, Minority 26, 26A, 26B, 26BB27
Agricultural income –
Agricultural income –
Derived : If land is the immediate and effective source of revenue and not
secondary or indirect source.
SECTION 10(1)
Eg.
Land transferred in consideration inter-alia
of Life annuity which is charged on land,
annual payment is ?
An allowance called ‘malikana’ paid by
government under statutory obligation to
proprietor dispossessed of land
Interest on arrears of rent payable in respect
of agricultural land.
SECTION 10(1)
Process must be :
Provided that—
the building is on or in the immediate vicinity of the land, and
is a building by reason of his connection with the land, requires as a dwelling house,
or as a store-house, or other out-building, and
land is either assessed to land revenue in India or
where the land is not so assessed to land revenue or subject to a local rate, it is not
situated—
(A) in any area which is comprised within the jurisdiction of a municipality or a
cantonment board and which has a population of not less than ten thousand
(B) in any area within such distance, not being more than eight kilometres, from the
local limits of any municipality or cantonment board referred to in item (A)
SECTION 10(1)
EXPLANATIONS :
Revenue derived from land shall not include any income
arising from the transfer of any land referred to in item (a)
or item (b) of sub-clause (iii) of clause (14) of Section 2.
income derived from any building or land referred to in
sub-clause (c) arising from the use of such building or
land for any purpose (including letting for residential
purpose or for the purpose of any business or profession)
other than agriculture shall not be agricultural income.
any income derived from saplings or seedlings grown in a
nursery shall be deemed to be agricultural income.
(whether basic operations carried or not)
SECTION 10(1)
Computation of Net Agricultural Income :
Rent/Revenue : Computed as per provisions of
Income from other sources (section 57 to 59)
Provions of 40A also applicable except 40A(3) and
(4).
Agriculture/Processing : Computed as per
provisions of Business & profession except 35,
40A(3) and (4).
Income from Building : Computed as per
provisions of Income from House Property
SECTION 10(1)
Incomes which are partly agricultural, partly non-agricultural :
Share of partner –
if received by partner
10(6)(ii) –
remuneration received by foreign national
as an official by whatever name called
of an embassy, high commission, consulate, trade representative
or member of staff of such officials
for service in such capacity,
provided their country grants similar exemption to similar Indian
officials
in case of members exemption will be available only if they are
subjects of country represented and they are not enagaged in any
business or employment in India otherwise than as members of
such staff
SECTION 10(6)
10(6)(vi)
the remuneration received by foreign national as an employee
of a foreign enterprise for services rendered by him during his
stay in India, provided—
(a) the foreign enterprise is not engaged in any trade or
business in India ;
(b) his stay in India does not exceed in the aggregate a
period of ninety days in such previous year ; and
(c) such remuneration is not liable to be deducted from the
income of the employer chargeable under this Act ;
SECTION 10(6)
10(6)(viii)
Eg. ABC Ltd. A foreign Co. enters into agreement with X Ltd.
An Indian Co on 15.4.2002. The agreement is in accordance
with the industrial policy of Govt. During the year ending
31.3.2009 a royalty of Rs.50,00,000/- is paid by X Ltd. to ABC
Ltd. Compute the tax payable by ABC Ltd. Tax rate – 20.6 %
(section 115A)
Assuming :
X Ltd. Pays tax payable by ABC Ltd. As per terms of
agreement.
The agreement did not provide that the tax will be payable by X
Ltd., but they mutual agrees that the royalty will be net of taxes.
Agreement provided for payment of taxes by X Ltd. And was
entered on 5.6.2003
SECTION 10(6B)
“Consultant” means—
any individual, who is either not a citizen of India or, being a
citizen of India, is not ordinarily resident in India ; or
any other person, being a non-resident,
any sum received under a Keyman insurance policy [ ife insurance policy
taken by a person on the life of another person who is/was the employee of
the first-mentioned person or is/was connected with the business of the first-
mentioned person]
any sum received under an insurance policy issued on or after the 1st day of
April, 2003 in respect of which the premium payable for any of the years
during the term of the policy exceeds twenty per cent of the actual capital sum
assured:
SECTION 10(10D)
Not applicable to any sum received on the death of a person
if, though he has not rendered such continuous service, the service has been
terminated by reason of the employee’s ill-health, or by contraction or discontinuance
of the employer’s business or other cause beyond the control of the employee, [or]
if, on the cessation of his employment, the employee obtains employment with any
other employer, to the extent the accumulated balance due and becoming payable to
him is transferred to his individual account in any recognised provident fund
maintained by such other employer.
interest payable—
(a)by Government or a local authority on moneys borrowed or debts owed
by it to, sources outside India before 1.6.2001
(g) by a public company formed and registered in India with the main object of
carrying on the business of providing long-term finance for construction or
purchase of houses in India for residential purposes, being a company eligible for
deduction under clause (viii) of sub-section (1) of section 36 on any moneys
borrowed by it in foreign currency from sources outside India under a loan
agreement approved by the Central Government 1.6.2003, to the extent to which
such interest does not exceed the amount of interest calculated at the rate approved
by the Central Government in this behalf, having regard to the terms of the loan
(h) by any public sector company in respect of such notified bonds or debentures
and subject to such conditions, including the condition that the holder of such
bonds or debentures registers his name and the holding with that company,
SECTION 10(15)
by Government on deposits made by an employee of the Central Government or a State
Government or a public sector company, in accordance with such scheme as the Central
Government may, by notification in the Official Gazette, frame in this behalf, out of the moneys
due to him on account of his retirement, whether on superannuation or otherwise.
Explanation 1A.—“interest” shall not include interest paid on delayed payment of loan or on
default if it is in excess of two per cent per annum over the rate of interest payable in terms of
such loan.
SECTION 10(15)
10. interest on—
(a) securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in
the Reserve Bank’s SGL Account No. SL/DH 048;
(b) deposits for the benefit of the victims of the Bhopal gas leak disaster held in
such account, with the Reserve Bank of India or with a public sector bank, as the
Central Government notify in the Official Gazette, specify, whether prospectively
or retrospectively but in no case earlier than the 1st day of April, 1994 in this
behalf.
11. interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999
notified by the Central Government
(2) It shall be certified by the Head of the Department where the deceased member of the
armed forces (including para-military forces) last served, or the service headquarters, as the
case may be, that the death of such member has occurred in the course of operational
duties in circumstances mentioned above
SECTION 10(19A)
the annual value of any one palace in the occupation of a
Ruler, the annual value of which was exempt from income-tax
before the commencement of the Constitution (Twenty-sixth
Amendment) Act, 1971 [28.12.1971], by virtue of the
provisions of the Merged States (Taxation Concessions) Order,
1949, or the Part B States (Taxation Concessions) Order, 1950,
or, as the case may be, the Jammu and Kashmir (Taxation
Concessions) Order, 1958.
SECTION 10(20)
the income of a local authority which is chargeable under the
head “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 not being water or electricity within its
own jurisdictional area or from the supply of water or
electricity within or outside its own jurisdictional area
SECTION 10(20)
“local authority” means—
(i) Panchayat as referred to in clause (d) of article 243 of the
Constitution; or
(ii) Municipality as referred to in clause (e) of article 243P of
the Constitution or
(iii) Municipal Committee and District Board, legally entitled to,
or entrusted by the Government with, the control or
management of a Municipal or local fund; or
(iv) Cantonment Board as defined in section 3 of the
Cantonments Act, 1924
Agricultural Produce Committee [156 taxman 286],
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 clause above
subject to the condition that such voluntary contribution is not held by the scientific
research association, otherwise than in any one or more of the forms or modes specified
in sub-section (5) of section 11, after the expiry of one year from the end of the previous
year in which such asset is acquired or the 31st day of March, 1992, whichever is later:
SECTION 10(21)
Profits and gains of business of the scientific research association will be taxable 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:]
Withdrawal of approval : Where the scientific research association is approved by the Central
Government and subsequently that Government is satisfied that—
(i) the scientific research association has not applied its income in accordance with the
provisions contained in clause (a) or
(ii) the scientific research association has not invested or deposited its funds in accordance with
the provisions contained in clause (b) or
(iii) the activities of the scientific research association are not genuine; or
(iv) the activities of the scientific research association are not being carried out in
accordance with all or any of the conditions subject to which such association was approved
it may, at any time after giving a reasonable opportunity of showing cause against the proposed
withdrawal to the concerned association, by order, withdraw the approval and forward a copy
of the order withdrawing the approval to such association and to the Assessing Officer.
SECTION 10(22B)
Income of News Agency set up in India solely for collection and distribution of news
as the Central Government may notify.
The exemption is available only if :
the news agency 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
notification issued at any one time, have effect for such assessment year or years, not
exceeding three assessment years
If Government is satisfied that such news agency has not applied or accumulated or
distributed its income in accordance with the provisions contained in the first proviso,
it may, at any time after giving a reasonable opportunity of showing cause, rescind
the notification.
Notified – PTI and United News Agency of India.
Required to file return even if exempt u/s.139(4C)
SECTION 10(23A)
Income (other than “Income from house property” or any income received
for rendering any specific services or income by way of interest or
dividends derived from its investments)
of an association or institution established in India
its object the control, supervision, regulation or encouragement of the
profession of law, medicine, accountancy, engineering or architecture or
such other profession
as notified from time to time will be exempt if :
such approval shall at any one time have effect for such assessment
year or years not exceeding three assessment years
SECTION 10(23AAA)
Superannuation
Illness of self or spouse or dependant children
income received—
by the Board of Trustees constituted under the Coal Mines Provident Funds
and Miscellaneous Provisions Act, 1948, on behalf of the Deposit-linked
Insurance Fund established under section 3G of that Act; or
by the Board of Trustees constituted under the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952, on behalf of
SECTION 10(25A)
Rubber Board
Tea Board
Tobacco Board
Spices Board
Coir Board
SECTION 10(30)
assessee who carries on the business of growing and
manufacturing tea in India, the amount of any subsidy
received from or through the Tea Board under any such
scheme for replantation or replacement of tea bushes or
for rejuvenation or consolidation of areas used for
cultivation of tea as the Central Government may notify, if
:
the assessee furnishes to the Assessing Officer, along with
his return of income for the assessment year concerned or
within such further time as the Assessing Officer may
allow, a certificate from the Tea Board as to the amount of
such subsidy paid to the assessee during the previous year
SECTION 10(31)
in the case of an assessee who carries on the business of growing and
manufacturing rubber, coffee, cardamom or such other commodity in
India, as the Central Government may notify
the amount of any subsidy received from or through the concerned Board
under any such scheme
for replantation or replacement of rubber plants, coffee plants, cardamom
plants or plants for the growing of such other commodity or
for rejuvenation or consolidation of areas used for cultivation of rubber,
coffee, cardamom or such other commodity as the Central Government
may notify:
Subject to the assessee furnishing to the A.O., along with his return of
income for the A.Y. concerned or within such further time as the A.O. may
allow, a certificate from the concerned Board, as to the amount of such
subsidy paid to the assessee during the previous year.