Exclude Income under Income Tax– Section 10
The different items of income referred to in the various clauses of section 10 are excluded from the total income of an assessee. These incomes are known as exempted incomes. Subsequently, such income will not enter into the calculation of taxable income.
Few of Income not taxable under Income Tax Act
AGRICULTURAL INCOME – SECTION 10(1)
Agricultural income is excluded under section 10(1).
However, agricultural income has to be aggregated with non agricultural income for calculating the rate at which non-agricultural income would be subject to tax, in case of individuals, HUF, AOP & BOIs etc., where the –
• agricultural income exceeds ` 5,000 p.a. and
• non-agricultural income exceeds basic exemption limit.
Below are the steps to be followed in calculation of tax –
Step 1: Tax on non-agricultural income plus agricultural income
Step 2: Tax on agricultural income plus basic exemption limit
Step 3: Tax payable by the assessee = Step 1 – Step 2
Step 4: Add Surcharge/Deduct Rebate u/s 87A, if applicable.
Step 5: Add Health and Education Cess@4%.
PARTNERS SHARE – SECTION 10(2A)
The partner’s share in the total income of the company or LLP is excluded from tax.
INCOME OF OFFICIAL OF AN EMBASSY, HIGH COMMISSION, ETC. – SECTION 10(6)
Remuneration received by a person, who is not a citizen of India, as an official of an embassy, high commission, legation, consulate or the trade representation of a foreign State or as a member of the staff of any of these officials would be excluded, subject to satisfaction of few conditions:
- These members of staff are subjects of the country represented and not engaged in any business or profession or employment in India else than as members of such staff.
- remuneration of corresponding officials of the Government resident for similar purposes enjoy similar exclusion in the other Country.
INCOME RECEIVED ON ACCOUNT OF ANY DISASTER – SECTION 10(10BC)
Compensation received or receivable from the Central Government, State Government or local authority by a person or his legal heir on account of any disaster is excluded except to the extent of loss or damage permitted as deduction under the Act.
SUKANYA SAMRIDDHI ACCOUNT – SECTION 10(11A)
Any payment from Sukanya Samriddhi Account
SCHOLARSHIP – SECTION 10(16)
The value of scholarship permitted to meet the cost of education would be excluded from tax in the hands of the recipient irrespective of the amount or source of scholarship.
DAILY ALLOWANCE – SECTION 10(17)
Daily allowance received by any Member of Parliament or of State Legislatures or any Committee thereof are excluded.
AWARDS – SECTION 10(17A)
Awards for literary, scientific and artistic works and other awards by the Government are excluded.
PENSION – SECTION 10(18)
Pension received by individual who has been in service of Central or State Government and has awarded “ParamVir Chakra” or “MahaVir Chakra” or “Vir Chakra” such other gallantry award as the Central Government notifies is excluded from tax.
SECTION 10(26)
Income from any source in the mentioned areas or States in which member of a Scheduled Tribe is staying or income by way of dividend or interest on securities is excluded in the hands of member of the Scheduled Tribe.
SIKKIM – SECTION 10(26AAA)
Income from any source in the state of Sikkim, dividend income and interest on securities is exempt in the hands of a Sikkimese person. This exclusion is not available to a Sikkimese woman who, on or after 1st April, 2008, marries a non-Sikkimese individual.
SUBSIDY FOR TEA – SECTION 10(30)
The amount of any subsidy received by any assessee engaged in the of growing and manufacturing tea in India through or from the Tea Board will be wholly exclude from tax.
SUBSIDY FOR RUBBER, COFFEE AND CARDAMOM – SECTION 10(31)
The amount of any subsidy received by an assessee engaged in the business of growing and manufacturing rubber, coffee, cardamom or other specified commodity in India from or through the Rubber Board, Coffee Board, Spices Board or any other will be excluded.
SECTION 10(35)
Any income received in respect of units from the Administrator of the specified undertaking/ specified company/ Mutual Fund shall be exempt. However, income originating from transfer of such units would not be excluded.
SPECIAL ECONOMIC ZONES (SEZS) – SECTION 10AA
Tax holiday for unit established in Special Economic Zones (SEZs), which has started or begins to manufacture or produce articles or things or provide any service on or after 1.4.2005 in any SEZ for 15 consecutive assessment years with respect of its profits derived from exports of such articles or things or export of services.
Amount of exemption = Profits of Unit in SEZ x Export turnover of Unit SEZ/Total turnover of Unit SEZ
100% of these profits would be excluded in the first five years, 50% in the next five years and in the last five years, 50% subject to transfer to SEZ Re-investment Reserve Account.
Enquire with Certicom Consulting in case of any further queries.