Introduction: Section-10 of Income Tax Act has given a long list of incomes which are totally exempt from tax and so these incomes are not included in the gross total income of the assessee. In other words, such incomes are totally tax-free. In computing the total income of any previous year of any person, any income falling within any of the following clauses shall be exempted.
1) Agricultural Income [Section 10(1)]:
Agriculture income from land situated in India is fully exempt from tax, if it comes within the definition of Agriculture Income as given in section 21(A).
2) Receipts by a Member from a Hindu Undivided Family [Section 10(2)]:
Any sum received by an individual as a member of a Hindu Undivided Family either out of income of the family or out of income of estate belonging to the family is exempt from tax. Such receipts are not chargeable to tax in the hands of an individual member even if the tax is not paid or payable by the family on its total income.
3) Share of Profits from partnership firm [Section 10(2A)]:
In case of a person being a partnership of a firm, which is separately assessed as such, his share in the total income of the firm shall be fully exempted.
4) Leave Travel Concession in India [Section 10(5)]:
The amount exempt under section-10(5) is the value of any travel concession or assistance received or due to the assessee.
a) From his employer for himself and his family in connection with his proceeding on leave to any place in India.
b) From his employer or former employer for himself and his family in connection with his proceeding to any place in India after retirement from service or after termination of the service.
5) Perquisites and Allowances paid by Government to its Employees Serving Outside India [Section 10(7)]:
All the perquisites are allowances paid by the Government to its employees for services rendered outside India, are exempt from tax.
6) Compensation Received by Victims of Bhopal Gas Leak Disaster [Section10(10BB)]:
Payment received by victims of Bhopal gas leak disaster, in accordance with the provisions of the Bhopal that leak disaster (processing of claims) Act, 1985 is not chargeable to tax.
7) Payment From Statutory Provident Fund [Section 10(11)]:
Any amount withdrawn from statutory provident fund is exempt from tax. This provision is applicable on Public Provident Fund also.
8) Payment From Recognized Fund [Section 10(12)]:
The accumulated balance due and becoming payable to an employee participated in a recognized provident fund, is exempt..
9) Interest Exempt From Tax [Section 10(15)]:
The interest received from various investments under this section is exempt from tax. Examples of investments are:
i) By a schedule bank on deposits in foreign currencies.
ii) Interest received in National Relief Bonds.
iii) Interest received in Capital Investment Bonds
10) Educational Scholarships [section 10(16)]:
The full amount of scholarship is granted to meet the cost of education is exempted. ‘Cost of education’ includes not only the tuition fees but all other expenses which are incidental to acquiring education. Scholarship may have been given by Government, University, Board, Trust, etc.
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