Following incomes are exempted from tax under section 10 of income tax act 1916 and they do not form part of total income:
- Agricultural income in India [sec 10 (1)] – following are the incomes from agricultural activity
- Income from producing and selling agricultural products.
- Rents from agricultural land given on a rent to someone for using, for agricultural purpose.
- Income from farm house if certain conditions are satisfied.
- Income from selling saplings, seeds, etc.
- Receipt by a member of HUF (exempted to avoid double taxation)
- Share in profit received by a partner from partnership firm (exempted to avoid double taxation)
- Interest on specified securities received is a non-resident (to encourage foreign investment)
- Interest on notified bonds and securities [sec 10 (15)]
- Educational scholarship (whether received from government or any other person)
- Daily allowance of members of parliament
- Awards or rewards received from central or state government
- Pension and family pension of Gallantry awards winners
- Family pension received by family members of armed forces.
- Income of approved scientific research association
- Income of approved professional institutions (income other than interest on securities, property income from rendering specific services to members and interest and dividend income).
- Income of educational institute (if certain conditions are satisfied)
- Income of hospitals (if certain conditions are satisfied)
- Income of registered trade unions or association of trade unions (only on interest or securities, property income and income from other sources are exempted
- Income of local authorities
- Dividends from Indian company (to avoid double taxation)
- Income from units of UTI (union trust of India)
- Income of minor (if income of any individual includes income of his minor child, he can claim exemption up to RS.1500. minor child under [sec 10 (2)]
- Long term capital gain on transfer or listed equity shares.