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EXEMPT INCOMES

Section

Type of assessee Type of income Exemptamount

Remarks

10(1) All assessees Agricultural income. No limit See defin ition S. 2(1A). Incomederived from any land or building for anypurpose other than agriculure would betaxable.

10(2) Member of HUF Sum paid out of incomeof family or income ofimpartible estate.

No limit Subject to the provision ofS. 64(2).

10(2A)

A person being a partner of afirm

Share in the total incomeof the firm separatelyassessed as a firm.

No limit For share of the partner see explanationto this sub-section.

10(4)(i)

Non-resident Interest on specifiedsecurities or bonds.

No limit See clause 1(A) under topic Taxation ofNon Residents No securities or bondsto be specified on or after 1-6-2002. Forspecified securities, see Notification No.SO-3331, dated 19.10.65.

10(4)(ii)

Individual, being residentoutside India under FERApermitted by RBI to maintainNRE account

Interest from NREaccount.

No limit The exemption which was withdrawnfrom 1st April, 2005 has been restored.

10(4B)

Non-resident being a citizen ofIndia or a person of Indianorigin

Interest on specifiedsaving certificate issuedbefore 1-6-2002subscribed in foreigncurrency.

No limit See clause 1(A) for non-resident andclause 3(A) for Specified Certificateunder topic Taxation of Non Residents.

10(5) Individual. Value of any travelconcession orassistance received by

order to him.

Amount ofexpencesactually

incurred.

Refer salary topic for more details.

10(7) Citizen of India Allowances or perquisites byGovernment forservices renderedoutside India.

No limit

10(10D)

All assessees Any sum received under a life insurance policyincluding bonus.

No limit The following amount shall not beexempt:

1 Amount received from aninsurance company on death ofdependent being a person withdisability in respect of aninsurance policy issued to him

for the maintenance of suchdependent.

2 Amount received under aKeyman Insurance Policy [Fordefinition of "Keyman InsurancePolicy", refer to Explanation tothis sub-section.]

3 Sum received under aninsurance policy issued on orafter 1-4-2003, where premium

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payable for any of the yearsexceeds 20% of the actualcapital sum assured unless suchsum is received on death of aperson.

10(11) All assessees Payments from astatutory P.F. or public

P.F. or from notified P.F.

No limit For Notified P.F.refer Notification No.SO 2430 dated 2.7.1968.

10(12) Salaried employee Accumulated balancesdue from recognisedprovident fund.

Full amountaccumulated balance.

Employee has put in 5 or more years ofservice or termination of service due tohis ill health or closure of employersbusiness or the balance from recognisedP.F. is transferred to another recognisedfund.

10(13) Salaried employee Payment from approvedsuperannuation fund.

Full amount Payment is on death or superannuation,on retirement after specified age or hisbecoming incapacitated prior to suchretirement.

10(15)(i)

All assessees Income by way of interest, premium onredemption or otherpayment from notifiedsecurities, bonds,certificates, etc. issuednotified by CentralGovernment.

Limits asspecified intheNotification

Please refer Page No.10.6

10(15)(iib)

Individual or HUF Interest on notifiedcapital investmentbonds.

No limit No bonds to be specified on or after 1-6-2002.

10(15)(iic)

Individual or HUF Interest on notified ReliefBonds.

No limit

10(15)(iid)

Individual who is NRI at thetime of acquisition of the bondsor his successor or the donee

Interest on notifiedBonds being NRI Bonds1988, NRI Bonds

(second series) issuedby SBI.

No limit No exemption available in the year ofpremature encashment.No bonds to bespecified on or after 1-6-2002

10(15)(iv)(c)

Non resident Interest payable byindustrial undertaking onmoney borrowed or debtincurred prior to 1-6-2001 in foreign countryin respect of purchase ofraw materials,components or plant andmachinery and approvedby Central Governmentincluding usance interestpayable outside India byan undertaking engagedin the business of ship

breaking in respect ofpurchase of a ship fromoutside India.

No limit

10(15)(iv)(fa)

NR or NOR Interest paid by ascheduled bank on RBIapproved foreigncurrency deposits,FCNR and RFCaccounts.

No limit The exemption which was withdrawnfrom 1-4-2005 has been restored.

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10(15)(vi)

All assessees Interest on Gold DepositBond Scheme, 1999.

No limit

10(15)(vii)

All assessees Interest on notifiedbonds issued by a localauthority.

No limit Ahmedabad notified vide 812(E) dt. 21-08-2001,364(E) dt. 16-03-2004 and113(E) dt. 24-03-2005, Hyderabadnotified vide 275(E) dt. 04-03-2002,Nashik notified vide 269(E) dt. 7-03-

2003, Tamil Nadu notified vide 545(E)dt. 12-05-2003 and Chennai notifiedvide 392(E) dt. 23-03-2004 and 114(E)dt. 24-03-2005, Karnataka notified vide941(E), dt. 20-08-2004.

10(16) Individual Scholarship granted tomeet cost of education.

No limit

10(17A)

All assessees Payment in cash/kind asaward instituted byCentral/StateGovernment or awardinstituted by the CentralGovernment approvedbody.

No limit

10(18) Central or State Governmentemployee

Pension. No limit Such employee is awarded Param Vir Chakra or Maha Vir Chakra or VirChakra or such other notified gallantryaward.

Any family member of anemployee referred above

Family Pension. No limit

10(19) Widow, children or nominatedheir of a member of the armedforces (including paramilitaryforces) of the Union.

Family Pension. No limit Where the death of such member of thearmed forces (including paramilitaryforces) has occurred in the course ofoperational duties, in suchcircumstances and subject to suchconditions as may be prescribed.

10(23

AAA)

Any person on behalf of

employees welfare fund

Any income. No limit 1 Fund is approved by CIT.

2 The income is applied or accumulated for applicationtowards objects of the fundonly.

3 The funds are invested aspermitted u/s. 11(5).

4 The approval shall have effectfor 3 years at a time.

10(23F)

Approved Venture CapitalFund or Venture CapitalCompany

Dividend and LTCG inrespect of equity sharesof a Venture Capitalundertaking.

No limit It shall not apply to investment madeafter 31-3-1999.

10(23FA)

Same as per S. 10(23F) Dividend other thanreferred in Section 115-O and LTCG in respectof equity shares of aventure capitalundertaking

No limit 1 Approved by Central Government.

2 It shall not apply to investmentmade after 31-3-2000.

10(23 Venture Capital Fund (VCF) or Any income. No limit 1 VCF/VCC granted registration

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FB) Venture Capital Company(VCC) set up to raise funds forVenture Capital Undertaking(VCU).

under SEBI Act.

2 VCF is operating under aregistered trust deed or operatingas venture capital scheme of UTI.

3 VCF/VCC fulfils conditionsspecified by SEBI.

4 VCU must be referred to in SEBI(VCF) Regulations, 1996 andnotified by CBDT.

10(23G)

Infrastructure Capital Fund orInfrastructure Capital Companyor a Co-operative Bank

Dividend other thanreferred in s. 115-OInterest or LTCG frominvestment in shares orLT finance made in aninfrastructure enterpriseon or after 1-6-1998.

No limit 1 The infrastructure enterprise mustbe approved by CentralGovernment.

2 Investment is made in any

enterprise or undertaking whollyengaged in the business referred toin Section 80-IA(4) or a housingproject as referred to in section 80-IB(10) or a hotel constructionproject of 3 star or higher categoryor hospital construction project withone hundred beds or more.

3 The income is, however, includiblein computing book profits u/s115JB.

10(32) Individual Parent All income of a minorchild which is clubbed.

Up to Rs.1,500 perminor child

10(33) All assessees Capital Gain arising ontransfer of Unit 64 on orafter 1-4-2002.

No limit

10(34) All assessees Dividends referred to insec. 115-O.

No limit

10(35) All assessees Income in respect ofUnits of UTI

No limit Does not apply to income arising fromtransfer of units of UTI or Mutual Fund.

Income in respect ofUnits of Mutual Fundspecified u/s. 10(23D)

10(36) All assessees LTCG on transfer ofequity shares purchased

between 1-3-2003 and1-3-2004.

No limit 1 Such equity shares should be ofa company which is part of BSE-

500 Index as on 1-3-2003 orwhere shares are allottedthrough public issue after 1-3-2003 and listed on a recognizedstock exchange in India before1-3-2004.

2 Transactions of purchase/saleare entered through recognizedstock exchanges in India.

10(37) Individual or HUF Capital gains arising No limit 1 Land should have been used for

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(w.e.f.A.Y.2005-06)

from transfer by way ofcompulsory acquisitionunder any law of theagricultural land in urbanarea referred to in s.2(14)(iii)(a) or (b) or atransfer theconsideration for whichis determined orapproved by the CentralGovt. or the RBI.

agricultural purposes for at leastlast 2 years immediatelypreceding the date of transfer.

2 Exemption applies tocompensation/consideration/additionalcompensation received on or

after 1-4-2004

10(38)[w.e.f.01.10.2004]

All assessees LTCG on transfer of equity share in acompany or a unit of anequity oriented fundwhere such transactionof sale is entered into onor after 01.10.2004 andis subjected to SecuritiesTransaction Tax (STT).

No limit For transactions subjected to STTplease refer topic on Rates.For defination of equity oriented fund,please refer Explanation to clause (38).

10A Industrial undertaking in w.e.f. A.Y. 2000-2001income for 10 years from

the year of CommercialProduction.

100% (90%for A.Y.

2003-04) ofthe profitsfrom exportcomputedas profits ofthebusiness inproportionto exportturnover tototalturnover.

1 Not formed by splitting up orreconstruction of existing business

or by transferring used plant andmachinery.1 Free Trade Zone(FTZ)

2 Manufactures/produces articles orthings (including computersoftware) and cutting and polishingof precious and semi-preciousstones (w.e.f. A. Y. 2004-05)

3 No deduction u/s. 80-IA, u/s. 80-IB,u/s. 80HH and u/s. 80HHA inrelation to the profits and gains ofthe industrial undertaking

4 FTZ/EHTP/STP/SEZ to be notifiedby Central Government.

5 Deduction shall be allowed only upto A.Y. 2009-10.

6 Report of a Chartered Accountantcertifying deduction to be furnished(w.e.f. 2001-02).

7 Profit from domestic sales up to25% of total sales would bedeemed to be profits from exportsonly for the A.Y. 2001-02.

8 Availing the concession is at theoption of the assessee.

9 Profits from onsite development ofcomputer software outside India

would be deemed to be profits fromexport.

10 In the event of transfer ofundertaking under amalgamationor demerger, the deduction shallcontinue to be allowed to theamalgamated or the resultingcompany.

11 No deduction shall be admissible toamalgamating or demerged

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company in the year ofamalgamation or demerger.

12 Deduction not allowable if returnnot filed by due date u/s. 139(1)[w.e.f. A.Y. 2006-07]

2 Electronic HardwareTechnology Park(EHTP) or SoftwareTechnology Park(STP) w.e.f. A.Y.1994-95

W.e.f. A.Y. 2000-2001income for 10 years fromthe year of CommercialProduction.

100% (90%for A.Y.2003-04) ofthe profitsfrom exportcomputedas profits ofthebusiness inturnover tototalturnover

As above

3 Special EconomicZone (SEZ) w.e.f.A.Y. 2001-02.

W.e.f. A.Y. 2001-2002,income from exportseligible for deduction for10 years from the year

of commercialproduction or up to A.Y.2009-2010, whichever isearlier.

Undertakings in SEZwhichbegins to

manufacture orproduce onor after 1-4-2003,exemptamountwould be100% ofprofits fromexport forfirst 5assessmentyears, 50%for next twoassessment

years andforsubsequentthreeassessmentyears,amounttransferredto SpecialEconomicZoneReserveAccount notexceeding50% ofsuch profit.

As above

10B Undertaking as a 100%Export-oriented Undertakingunder section 14 of IDRA(100% EOU).

As above. As above 1 As above, except No. 4.

10BA Undertaking manufacturing orproducing eligible articles orthings; i.e., all hand-madearticles of things, which are orartistic value and whichrequires the use of wood as

w.e.f. A. Y. 2004-05income derived fromexport out of India ofeligible articles orthings up to A. Y. 2009-10.

Profits fromexportcomputedas profits ofthebusiness in

1 Undertaking which has claimeddeduction u/s 10A or 10B for anyassessment year shall not beentitled to this deduction.

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the main raw material proportionto exportturnover tototalturnover.

2 Manufactures eligible articles orthings without the use of imported

raw materials. It employs 20 ormore workers.

3 Not formed by splitting up orreconstruction of the existingbusiness or by transferring usedplant and machinery.

4 90% or more of its sales during therelevant previous year are by wayof the exports of the eligible articlesor things.

5 Report of a Chartered Accountantcertifying deduction to befurnished.

6 No other deduction allowed underany other section in respect of theeligible export profit.

10C Industrial undertaking in anyIntegrated InfrastructureDevelopment Centre orIndustrial Growth Centre inNorth-Eastern region.

Income of tenconsecutive A.Ys. fromthe year of production upto A.Y. 2003-04.

No limit 1 Manufactures or produces anyarticle or thing on or after 1-4-1998.

2 Not formed by splitting up orreconstruction of the existingbusiness or by transferring usedplant and machinery.

3 No deduction u/s 80HH, 80HHA,

80-I, 80-IA, 80-IB or 80JJA inrelation to profit and gains of theindustrial undertaking.

For exemption under S. 10(5) Leave travel concession or assistance, S. 10(10) Gratuity, S. 10(10A)

Pension, S. 10(10AA) Leave salary, S. 10(10B) Compensation, S. 10(10C) Tax on perquisite, S.10(10CC) Voluntary retirement compensation, S. 10(13A) HRA and 10(14) Special Allowanceavailable to salaried employees. (Refer topic Salaries)

LIST OF BONDS, CERTIFICATES, ETC. SPECIFIED FOR THE PURPOSES OF SECTION 10(15)(i)

Sr.

No.

Particulars of securities, etc. Maximum

amount

Notification ref.

1 12 years National Savings Annuity Certificates Whole of theamount

No. 607(E) dt. 9-6-1989

2 National Defence Gold Bonds, 1980 Whole of the

amount

- do -

3 Special Bearer Bonds, 1991 Whole of the

amount

- do -

4 Treasury Savings Deposit Certificates (10 years) Whole of the - do -

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