Trusts formed for charitable or religious purposes which are intended to provide relief to poor, education, yoga or for advancement of any object of general public utility are allowed various benefits under the Income Tax Act, like tax exemption under section 11.

Income exempt from Income Tax

Last updated on Jun 7, 2022

Exemptions are those incomes which are exempt from tax. In other words, they do not form a part of the total income calculated for taxation purposes.

Incomes Exempt from Tax

Given below are some examples of income that are exempted from tax:

  • Agricultural income(( Section 10(1), Income Tax Act, 1961))
  • Any payments received from family income or income of an estate belonging to the family by an individual member of a Hindu Undivided Family(( Section 10(2), Income Tax Act, 1961))
  • Share of profit from a firm(( Section 10(2A), Income Tax Act, 1961))
  • Leave travel concession provided by an employer to his employee who is an Indian citizen
  • Remuneration received by foreign diplomats(( Section 10(6), Income Tax Act, 1961))
  • Death-cum-retirement gratuity(( Section 10(10), Income Tax Act, 1961))
  • Retrenchment compensation(( Section 10(10B), Income Tax Act, 1961))
  • Scholarship granted to meet the cost of education(( Section 10(16), Income Tax Act, 1961))
  • Family pension received by families of Armed Forces(( Section 10(19), Income Tax Act, 1961))
  • Foreign allowance granted by the  Government of India to its employees posted abroad(( Section 10(7), Income Tax Act, 1961))
  • Tax paid on behalf of foreign companies in India(( Section 10(6A), Income Tax Act, 1961))
  • Income of mutual fund set up by a public sector bank or financial institution(( Section 10(23D), Income Tax Act, 1961))
  • Compensation received by victims of Bhopal Gas Tragedy(( Section 10(10BB), Income Tax Act, 1961))
  • Any sum of money from a life insurance policy. This includes bonuses but does not cover Keyman insurance policies(( Section 10(10D), Income Tax Act, 1961))
  • Daily allowance of Member of Parliament or State Legislature(( Section 10(17), Income Tax Act, 1961))
  • Any income from an approved research association(( Section 10(22B), Income Tax Act, 1961))

Further, apart from the ones listed above, there are multiple exemptions under income tax law. To read more click here.

Some institutions are also exempt from giving tax such as India Wildlife Conservation Trust, charitable organizations etc. Read here to see more on exempted institutions.

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