Do you know these incomes are fully exempt from Income tax
Updated: as per amended finance act 2020
[Section 10 of the Income Tax Act allows the computation of specific incomes as tax-free. Here we have listed tax-free income mainly under Section 10(6) and other import incomes which are tax-free under section 10 such as 10(1), 10(2), 10 (2A),10(4),10(4B), 10(10D,10(10BC),and10(15).]
There are certain types of income for which your income tax liability is nil. Any income earned which is not subject to income tax is called exempt income. The following are fully exempt income under Section 10(6) of the Income Tax Act, 1961.
A widow or other legal heirs of an employee who dies while still in active service who receives a lump-sum payment made gratuitously or by way of compensation or otherwise [IT Circular No. 573, dated 21-08-1990]
An individual or legal heirs of an employee of Central or State Government, Local Authority or Public Sector who receives Ex-gratia payment consequent upon injury to the person or death of a family member while on duty [IT Circular No. 776, dated 08-06-1999]
Salary received from United Nation Organization [Circular No. 293, dated 10-02-1981]
Salary received by foreign national as an official of an embassy, high commission, legation, consulate, or trade representation of a foreign state is fully exempt from tax under section 10(6)(ii), provided the corresponding official in that foreign country enjoys a similar exemption
Remuneration received by a non-resident foreign citizen as an employee of a foreign enterprise for services rendered in India, is fully exempt from tax under section10(6)(vi), provided;
Foreign enterprise is not engaged in any trade or business in India
His stay in India does not exceed in aggregate a period of 90 days in such previous year
Such remuneration is not liable to deduct from the income of employer chargeable under Income Tax Act 1961
Salary received by a non-resident foreign national for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year is fully exempt under section 10(6)(viii).
Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions)
Following are some of the other types of income for which your income tax liability is zero.
Section 10(1)-Agricultural Income
Section 10(2)-Amount received out of income of family estate by a member of Hindu Undivided Family(HUF)
Section 10 (2A)- Share of profit received by a partner from the firm. 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.
Section 10(4)-Certain interest to non-residents
Section 10(4B)-Interest on notified savings certificates received by Indian citizen/NRI/PIO
10(10D)-Life insurance benefit including bonus
10(10BC)-Government compensation for damage due to disaster
[Nearly, 104 amendments are made either by amending/omitting existing sections or by insertion of new sections. In this article, the amendments, which are most relevant to salaried persons, are covered below.]