What are the Income tax exempted Incomes? How to earn tax free
Income in India? How to avail tax exemption?
There are few tax free earning options for the Indian Assessee. Those who
want to earn tax free income can chose these options. The tax free earning
Interest received from Savings Bank Account ? Section 80TTA of Income Tax Act,
Upto amount of Rs. 10,000/- is allowed to be deducted under section 80TTA from
taxable income. All the assesses who have earned interest income from savings
bank account can claim maximum of Rs. 10,000/- under this section.
Long Term Capital Gain from sale of Mutual Fund and Shares - Section 10(38)_of
Income Tax Act, 1961
If the assessee paid security transaction tax at the time of purchase of shares,
the long capital gain from sale of Equity shares and securities are exemption
from payment of capital gain tax.
Dividend Income from Domestic Companies and Mutual Fund- Section 10(34) and
Section 10(35) of Income Tax Act, 1961
Dividend Received on Investment is from domestic company is exempted from
payment of tax under section 10(34) and Dividend received from Mutual Fund
investment is exempted under section 10(35) of Income Tax Act.
Agricultural Income ? Section 10(1) of Income Tax Act, 1961
Income from agriculture is exempted under section 10(1) of income tax Act 1961.
But at the time of computation of income the amount should be shown for rate
Interest on Public Provident Fund Account ? Section 10(11) of Income Tax Act,
Amount of Interest received from PPF account is exempted from income tax. It is
a tax free income in the hands of those who receive it.
Education Scholarship ? Section 10(16) of Income Tax Act, 1961
Amount of scholarship received for education is exempted from
payment of tax in the hands of person who receive it. As per section
10(16) of Income Tax Act, 1961 amount of scholarship for continuing
education is tax exempted and it is not necessary to get the amount
financed to get tax exemption.
Tax Exempted salary components
Some components of salary like House Rent Allowance (Section
10(13A), Leave Travel Allowance (Section 10(5), Pension Amount
(Section 10(10A), Leave Encashment Section 10(10AA) etc are exempted
from payment of tax subject to conditions in specific sections.