INCOME EXEMPT FROM TAX UNDER SEC 10

Prof. Ganesh Shinde

INTRODUCTION

Defination The provision of tax exemption in India is included in the 3rd chapter of the Indian Income Tax Act, 1961.

Sections 10, 11, 12 & 13

SEC 10(1)Agriculture income SEC 10(2)Income received by a member of HUF SEC10(2A)Share of profit received by a partner

SEC10(4)Non-resident income SEC10(5)Leave travel concession

Different situations
1.Journey by air

Amount exempt
Least of amount actually spent or amount of economy class air fare of the national carrier by the shortest route Least f amount actually spent or amount of air- conditioned first class rail fare by the shortest route. Least of actual amount spent or amount of first class or deluxe class fare by the shortest route Least of amount actually spent or amount of air- conditioned first class rail fare by the shortest route

2. Journey by rail and origin and destination are connected by any other modes of transport. 2a. Recognised public transport system exists. 2b. Recognised public transport system does not exist.

SEC10(6A), 10(6B), 10(6BB), 10(6C) -

SEC10(10)Gratuity
The minimum of the following three is exempt from income tax: Gratuity amount actually received 15 days salary (based on the last drawn salary) for every completed year of service (or part thereof in excess of six months)

Rs. 3,50,000 (This would be increased to Rs. 10,00,000

Sec. 10(10A )1.

2.

Pension Uncommuted Pension Commuted pension

GOVT. EMPLOYEE- fully exempt PVT. EMPLOYEE RECEIVING GRATUITY- total pension / 3. PVT. EMPLOYEE NOT RECEIVING GRATUITY- total pension / 2.

SEC.10(BB)Bhopal Gas

Sec. 10(10AA)Leave Salary

Particulars
Amount of exemption

Exemption in case of govt. employees

Entire amount is exempt from tax.

Exemption in case of any other employee

1.Avg. salary x leave credit 2. Avg. salary x 10 months 3. Actual leave encashment 4.MaximumRs5,00,000. Whichever is less Avg. salary in 10 months preceding the retirement, only basic, DA to the extent the terms of employment so provide & ToC. Maximum 1 month leave for each full year of service (less) actual period of leave taken.

How to calculate salary for the purpose of exemption?

Not applicable.

How to calculate leave credit, which is nothing, but leave eligible but not used?

Not applicable.

SEC10(10B)Retrenchment Compensation
Compensation received by a workman at the time of retrenchment is exempt to the extent of the lower of the following: 1. Amount calculated as per Industrial Disputes Act, 1947 2. Rs 5,00,000 3. The actual amount recd.

SEC10(10C)Compensation of Voluntary Retirement

SEC10(10D)Amount received under LIC

SEC10(11), 10(12)-Amount received under PF

STATUTORY PROVIDENT FUNDS
Employers contribution to provident fund Deduction under section 80C on employers contribution Exempt from tax

RECOGNISED PROVIDENT FUND

Exempt upto 12% of salary. Excess of employers contribution over 12% salary is taxable. Available

UNRECOGNISED PROVIDEN T FUND

Exempt from tax

PUBLIC PROVIDENT FUND

Employer does not contribute

Available

Available

Available

Interest Exempt from tax credited to provident fund

Exempt from tax if rate of interest not does not exceed notified rate of interest (i.e 9.5%) excess of interest over notified interest is taxable

Exempt from tax

Exempt from tax

Lumpsum Exempt from tax payment at the time of retirement or retirement of service

Exempt from tax in some cases, when not exempt provident fund will be treated as an unrecognized fund from the beginning

Payment received Exempt from tax in respect of employees own contribution is exempt from tax. Interest on employees contribution is taxable under the head income from other sources CIT V. G. Hyatt (1971) 80 ITR 177 (SC) Balance (i.e. employers contribution and interest thereon) is taxable under the head salaries

SEC10(13)Amount From An Approved Superannuation SEC10(13A)House Rent Allowance

House rent allowance granted to an assessee by his employer is exempt to the extent of the least of the following 1. Excess of rent paid over 10% of salary due for the relevant period, 2. If the accommodation is in: Calcutta, Chennai, Delhi and Mumbai- 50% of salary and in other places- 40% of salary 3. Actual allowance received

SEC10(17)Income from MPs & MLAs SEC10(17A)Awards & Rewards SEC10(18)Pension & family Pension In certain Cases

SEC10(19)Family pension received by family members of soldiers

SEC(20)-

Income of local authority

SEC(23D)Income from mutual funds

SEC10(23C)Income received by any person on behalf of specified national funds, approved public charitable institution, educational institute and hospitals
SEC10(23FB)Income of venture capital fund

SEC10(26AAA)Sikkimese SEC10(30)Manufacturing of tea SEC10(31)Rubber, coffee, etc

SEC10(32)Minor child SEC10(34)Dividend SEC10(43)Reverse Mortgage

PRESENTED BYCHANDANI BOGHRA MOEEN MEMON NIRALI PATEL MIHIR SAVLA SHRENIK SHAH SAGAR UMBARKAR