ABSTRACT
INCOMES WHICH DOES NOT FORM PART OF TOTAL INCOME
There are different incomes which are exempted from Income Tax in India. Since the
formation of Indian Income Tax Act, 1961 government has exempted certain income from payment
of Income Tax and this list of exempted income is increasing from that day. One of the few reasons
for creating this list is to avoid double taxation of income, second is to give the benefit to
underpriviledged and third is to give benfit to government employees posted outside and foreign
diplomats posted in India. One of the main incomes which are exempted from Tax is income from
Agricuture and other is dividend Income in hands of Shareholder on which company pays the
dividend distribution tax directly.
Submitted by,
N.S.Rupesh
2017057
VI - Semester
CHAPTER – 1
INTRODUCTION
Incomes Which Do Not Form Part Of Total Income Are Exempt Income. Thus Income, To
The Extent They Are Exempt, Are Not Included In The Total Income For Computation Of His
Total Income. As Per Section 10 To 13a, Certain Incomes Are Totally Exempt From Tax Or
Exempt Upto
A Certain Amount. Section 10 (Income Not To Be Included In The Total Income Of Any
Assessee.) Section 10aa (Established Units In Special Economic Zones) Section 11-13 ( Income Of
Trust/ Institution ) Section 13a (Income Of Political Parties) Section 13b (Income Of A Electoral
Trust) Incomes Not To Be Included In Total Income Of Any Person Section 10(1) Agriculture
Income Section 10(2) Sum Received By A Member From Huf Section 10(2a) Profit Of A Partner
From A Firm Section 10(4) Interest On Non Resident Account Section 10(5) Travel Concession
From A Employer (A) Incomes Not To Be Included In Total Income Of Any Person Section 10(6)
Remuneration To A Non Citizen Section 10(7) Allowances/ Perquisites Outside India Section
10(10) Gratuity (Death Cum Retirement) Section 10(10a) Pension Section 10(10aa) Leave
Encashment Section 10(6) Remuneration To A Non Citizen Means Individual Who Is Not A
Citizen Of India. Remuneration Received By: 1. Diplomats, Foreign National As An Official.
Whatever Names Called As An Embassy, High Commission, Legation, Trade Representative Of A
Foreign State Or As A Staff Of These Members. 2. Foreign National As Employee Of A Foreign
Enterprise. Services Rendered During His Stay In India. 3. Non-Resident Employed On Foreign
Ship. Provided His Stay In India Should Not Exceed 90 Days In The Previous Year. 4. Employee
Of Foreign Government During His Training In India. (A) Incomes Not To Be Included In Total
Income Of Any Person Section 10(10b) Retrenchment Compensation Section 10(10c) Amount
Voluntary Retirement Section 10(10cc) Non Monetary Poerquisites Section 10(10d) Amount On
Maturity Of Lic Section 10(11) Provident Fund Section 10(10d) Amount On Maturity Of Lic Lic
Amount On Maturity + Bonus On Such Policy Exludes: Not An Exempt. Policy U/S 80dd(3) Or
80dda(3) . Keyman Insurance Policy. An Insurance Policy Issued On Or After 01.04.2003 But
Before 31.03.2012, If Premium Exceeds 20% Of The Actual Capital Sum Assured. But If Received
After Death Of A Person Is Fully Exempt. An Insurance Policy Issued On Or After 01.04.2012 If
Premium Exceeds 10% Of Sum Assured. An Insurance Policy On Or After 01.04.2013 On The Life
Of Any Person Who Is I) Disable As Per Section 80u Ii) Suffering From Disease As Per Section
80ddb If Premium Payable Exceeds 15% Of The Actual Capital Sum Assured. Incomes Not To Be
Included In Total Income Of Any Person Section 10(12) Payment From Rpf Section 10(13) Any
Payment From An Approved Saf Section 10(13a) Hra Section 10(14) Special Allowances Section
10(15) Interest, Premium & Bonus On Specified Investments Section 10(15) Interest, Premium &
Bonus On Specified Investments. Interest 1. Interest Of Any Assesee On Deposits, Securities,
Certificates And Bonds Issued By Cg. Subject To Limits & Conditions. 2. On Gold Deposits 3.
Bonds Issued By A Local Authority 4. Deposits With Offshore Banking Unit. Premium Or Bonus
Or Other Payment On Securities Bonds Annuity Certificates Saving Certificates Or Other
Certificates Issued By Cg Subject To Conditions And Limits Incomes Not To Be Included In Total
Income Of Any Person Section 10(16) Scholarship For Education Section 10(17) Daily Allownaces
To Mps & Mlas Section 10(17a) Award & Reward Section 10(18) Pension To Awardess Or Their
Members Section 10(20) Income Of Local Authority Incomes Not To Be Included In Total Income
Of Any Person Section 10(21) Income From Approved Research Association Section 10(22b)
Income Of Specified News Agency Section 10(23a) Income Of Professionals/ Institution Section
10(23bbh) Income Of Prasar Bharti Section 10(23c) Income Of Certain Funds Of National
Importance Section 10(23c) Income Of Certain Funds Of National Importance 1.The Prime
Minister’s National Relief Fund 2.The Prime Minister’s Fund For Promotion Of Folk Art 3.The
Prime Minister’s Aid To Students Fund 4.The National Foundation For Communal Harmony
5.University Or Educational Institution Solely For Educational Purpose. Section 10(23c) Income Of
Certain Funds Of National Importance 6. Any Hospital Or Other Institution For Reception And
Treatment Of Persons Suffering From Illness Mental Defectiveness During Convalescence
Requiring Medical Attention Or Rehabilitation Existing Solely For Philanthropic For Above Two
Points Only Exemption Shall Be Given To Following Type Of Universities Or Institution Or
Hospitals A) Financed By The Government (Wholly Or Substantially) B)Aggregate Annual
Receipts Do Not Exceed Rs.1 Crore C) Other Than Institution Mention (A) & (B) , Institution
Approved By Prescribed Authority. I.E. Principal Chief Commissioner Or Chief Commissioner Or
Principal Director General Or Director General . Application On Or Before 30the September Of
The Relevant Assessment Year. Section 10(23c) Income Of Certain Funds Of National Importance
Incomes Not To Be Included In Total Income Of Any Person Section 10(23d) Income Of Mutual
Funds Section 10(23fc) Income Of Business Trust Section 10(23fd) Income By Unit Holder From
The Business Trust Section 10(32) Income Of Minor Clubbed In The Hands Of A Parent Section
10(34) Dividend Incomes Not To Be Included In Total Income Of Any Person Section 10(34a)
Income To Shareholder On Account Of Buy Back Section 10(35) Income From Units Of Uti
Section 10(35a) Income From Securitization Trust Section 10(37) Capital Gain On Compulsory
Acquisition Of Agriculture Land Section 10(38) Capital Gains From Sale Of Shares And Units 1.
20. (A) Incomes Not To Be Included In Total Income Of Any Person Section 10(39) Income From
International Sporting Event Held In India Section 10(43) Amount Of Loan Under Reverse
Mortgage Scheme Section 10(44) Income Of New Pension Scheme Trust Section 10(45)
Allowances/Perquisite To Chairman & Member Or Retired Chairman / Member Of U.P.S.C.
Section 10(46) Income To Notified Body/Authority/ Board/Trust/ Commission Incomes Not To Be
Included In Total Income Of Any Person Section 10(47) Income Of Infrastructure Debt Fund
Section 10(48) Income Received By Certain Foreign Companies. Special Provisions In Respect Of
Newly Established Units In Special Economic Zones Section 10aa Section 10aa Eligible Assessee:
Every Assessee Beign Entrepreneurs, Entrepreneurs May Be A Person. Who Derived Profits Or
Gains From An Undertaking Beign A Unit, Engaged In The Export, Export Of Articles Or Things
Or Services Essential Conditions To Claim Deduction 1. Begins During The Previous Year 2005-06
Or Thereafter In Any Sez. 2. New Establishment. I.E. No Splitting Up Or Reconstruction Of
Already Business In Existence. 3. New Plant & Machinery. I.E. P&M Should Not Be Used Before
In Any Business. Two Exceptions Are There: 1) A) It May Be Used Outside India By Any Person
Other Than Assessee And P&M Is Imported From Foreign Country By Assesee For New Business .
B) No Deduction On Depreciation In Respect Of Previously Allowed Depreciation To Any Person.
2) Total Value Of Second Hand P&M Should Not Exceed 20% Of The Value Of P&M Used In
Such Export Business. Assessee Should Get His Account Audited And Signed By Ca. And Such
Report &
Prescribed Form Should Furnish To Relevant Department Alongwith The Return Of Income. 5.
Assessee Can Claim Deduction In One Section Only. I.E. If He Is Claiming Deduction U/S 10aa
Then He Shall Not Be Eligible For Deduction U/S 35ad For Any Capital Expenditure. Period For
Which Deduction Is Available For A Total Period Of 15 Relevant Assessment Years, For First 5
Consecutive A.Y 100% Of P&G, For Next 5 Consecutive A.Y 50% Of P&G, For Next 5
Consecutive A.Y Not More Than 50% Pf P&B Dr. To P&L A/C In P.Y. In Respect Of Which
Deduction Is Allowed And Cr. To Sez Reinvestment Reserve Account To Be Created And Utilizes
For The Purpose Of The Business Of The Assessee In The Manner Laid Down Consequences Of
Mis-Utilisation Or Non-Utilisation Of Reserve (For Last 5 Year) Where Any Amount Credited To
Sez Re-Investment Reserve Account, Has Not Been Used For The Purchase Of New Plant &
Machinery, Then Such Utilized Amount Shall Be Trated As Income In The Year Of Utilization &
Shall Be Charge To Tax. Should Be Used Before The Expiry Of 3 Years . If Not Used Then Shall
Be Treated As Income & Shall Be Charge To Tax. Computation Of Deduction For Such
Undertakings Profits From The Business Of The Undertaking Being The Unit Et Of The
Undertaking Of Such Article/Things Or Services Total Turnover Of Business Carried On By The
Undertaking Et Is Export Turnover : In Respect Of Export By Such Undertaking, Being The Unit If
Articles Or Things Or Services Received In Or Brought Into. Income From Property Held Under
Charitable Or Religious Purposes Section 11 To 13 Income Of Political Parties Section 13a Income
Of Political Parties Following Incomes Are Exempt: 1.Income From House Property 2.Income
From Other Sources 3.Voluntary Contribution From Any Person 4.Capital Gains Subject To
Conditions: 1. Proper Maintenance Of Books Of Account And Other Documents As Will Enable
The Ao To Properly Deduce Its Income Therefrom. 2. Voluntary Contribution If Exceeds
Rs.20,000,
It Maintains & Keeps Records Of Same With Name & Address Of Person. 3. Accounts Audited By
Ca. 4. Submit Report U/S 29c(3) Of The Representation Of The People Act, 1951 For The Relevant
Financial Year. Income Of Electoral Trust Section 13b.
Apart from above discussed exemption of section 10 following is the list of other important
exemptions These are few other important incomes which are exempted :
Section 10A provides for exemption in respect of income of newly established undertakings
in free trade zone or electronic hardware technology park or electronic software technology
park.
Section 10AA provides for exemption in respect of income of newly established units in
Special Economic Zones.
Section 11 and 12 provide exemption in respect of income of a public charitable or religious
trust.
Section 13A provides exemption in respect of income of a political party.
Section 13B provides exemption in respect of income of an electoral trust.
