Dibrugarh University B. Com 6th Semester Income Tax Notes Unit-2 - myedu365

Unit – II

Exempted income u/s 10:- Income which are not form a part of total income, Tax holiday for industrial units in Trade Zones, Tax Holiday for newly established units in special Economic Zones, Tax Holiday for 100% export oriented undertakings.

Exempted income under section 10

1. Agricultural income [section 10(1)]: Agricultural income is totally exempt, provided it falls within the definition of agricultural income given under section 2(1A). Agricultural income, though exempt, is to be aggregated in case of certain assessee for the purpose of determining the rate of tax on non-agricultural income. 

2. Sum received by a member from HUF [section 10(2)]: Any sum received by an individual, as a member of a Hindu undivided family, shall be exempt in the hands of the member.

3. Share of profit of a partner from a firm [section 10(2A)]: In case of a person being a partner of a firm (which includes limited liability partnerships) his share in the total income of the firm shall be exempt from tax.

4. Interest on Non-resident (External) Account [section 10(4)]: In case of an individual assessee any income by way of interest or money standing to his credit in a non-resident(External) Account in any bank in India shall also be exempt if certain conditions are satisfied.

5. Allowances or perquisites outside India [section 10(7)]: Any allowances or perquisites paid or allowed, as such, outside India by the government to a citizen of India, for rendering services outside India, are exempt.

6. Tax on non-monetary perquisites paid by employer [section 10(10CC)]: The income tax actually paid by the employer himself on a non-monetary perquisite provided to the employee shall be exempt in the hands of the employee.

7. Provident fund [section 10(11)]: Any payment from a provident fund to which the Provident Fund Act, 1925 applies or from Public Provident Fund set up by the Central Government shall be exempt.

8. Scholarships granted to meet the cost of education [section 10(16)]:  Scholarships granted to meet the cost of education are exempt.

9. Annual value of one palace of the ex-ruler [section 10(19A)]: The annual value in respect of any one palace which is in the occupation of an ex-ruler is exempt from tax.

10. Income of an approved research association [section 10(21)]: Under this clause income of a research association, which is approved is exempt from tax if certain conditions are satisfied.

11. Income of specified news agency [section 10(22B)]: Any income of such news agency, set up in India solely for collection and distribution of news, as the central government may notify, in this behalf, is totally exempt.

12. Income of trade union [section 10(24)]: Income from house property and income from other sources of a registered union, within the meaning of the Indian Trade Union Act, 1926 or an association of such Trade Unions, formed primarily for the purpose of regulating the relations between workman and employers or between workmen and workmen is exempt from income tax.

13. Income of a member of scheduled tribe residing in certain specified areas [section 10(26)]: Section 10(26) grants exemption to certain incomes of a member of a scheduled tribe residing in certain specified areas or in the states of Arunachal Pradesh, Manipur, Mizoram or Ladakh region of Jammu & Kashmir if certain conditions are satisfied.

14. Dividend to be exempt in the hands of the shareholders [section 10(34)]: Any dividend declared, paid or distributed by a domestic company is liable to dividend distribution tax. Hence, such dividend received by the shareholder shall be exempt in his hands.

15. Income of an individual being a Sikkimese [section 10(26AAA)]: The following income, which accrues or arise to a Sikkimese individual, shall be exempt from income tax-

a. Income from any source in the state of Sikkim; or

b. Income by way of dividend or interest on securities.

However, this exemption will not be available to a Sikkimese woman who, on or after 1.4.2008, marries a non- Sikkimese individual.