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Tax Exemptions As Per Income Tax Act 1961


Every income is taxable under income tax law, whether it is received in cash or in kind, whether it is capital or revenue income, but still some incomes are given exemption from tax. Income-tax Act contains  a number of provisions which exclude various kind of incomes from the purview of taxation.



The incomes enumerated below are exempt from tax

  • Agricultural income -This incomes has to be considered for determining the rate of tax applicable to the other income
  • Any sum received by an individual as a member of a Hindu undivided family from income of the family or from the income of the impartible estate of the family.
  • Share of profit of a person from a firm, which is separately assessed and where he is a partner.
  • Any receipts which are of casual and non-recurring nature, to the extent mentioned below :
    • not exceeding rupees two thousand five hundred in respect of winning from races including horse races
    • rupees five thousand in any other case
  • Any payment made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 or any scheme framed thereunder.
  • Any scholarship granted to meet the cost of education.
  • Any payment, whether in cash or kind, by way of any award instituted in public interest by the Central Government or any State Government or by any other body approved by the Central Government in this behalf.
  • Annual value of one palace occupied by a former ruler.
  • Income of a local authority under the heads “Income from House Property”, “Capital Gains”, “Income from other sources” or income from supply of commodity or service within its jurisdiction or income from supply of water or electricity in its jurisdiction or outside its jurisdiction.
  • Any income of an authority constituted under a law for satisfying the housing need or for planning, development or improvement of cities, towns or villages.

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The incomes enumerated below are exempt from tax subject to fulfillment of certain conditions

  • Any interest received by a non-resident from specified securities or bonds, and any income received as premium on redemption of such bonds.
  • Any interest received by an individual on moneys standing to his credit in Non-resident (External) Account maintained by him with any bank in India in accordance with the Foreign Exchange Regulation Act.
  • Any interest from notified Savings Certificates received by an Indian citizen or an individual of Indian origin, being a non-resident, provided that the certificates have been subscribed to in convertible foreign exchange remitted from outside India in accordance with the provisions of Foreign Exchange Regulation Act.
  • The value of leave travel concession provided to an individual and his family by an employer or a former employer in connection with his proceeding on leave to any place in India, or for proceeding to any place in India on retirement or termination of his services.
  • Any tax paid by the employer of an individual, being a non-resident technician for a period of 48 months.
  • Any passage moneys or the value of concessional passage received by a foreign national from his employer for himself, spouse and children from proceeding outside India on leave or retirement.
  • Any remuneration received by a foreign diplomat or a member of his staff.
  • Remuneration received by a foreign citizen as an employee of a foreign  enterprise if his stay in India does not exceed 90 days.
  • Any income by way of salary received by a non-resident foreign citizen as a member of ships’ crew provided his total stay in India in that previous year does not exceed 90 days.
  • Any remuneration received by a foreign national as an employee of a foreign government deputized in India for training in a government establishment or concern or a public sector undertaking.

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Income of a political party under the head Income from House Property ‘or Income from other sources ‘or any income from voluntary contributions.

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One comment

  1. wants to know eligibility for making donations undersection 35 of incometaxact1961 under clause(ii)ofsub-section(1) read withrules 5c and 5E of the incometax act1962 also explain me people in beer manufacturing and distilleries can make donation under this section pl explain.

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