Agricultural Income

The most famous category of tax-free income is income from agriculture. Income earned from agricultural activities is free from income tax under Section 10(1) of the Income Tax Act, 1961. The logic behind this exemption is to support and promote the agriculture sector, which plays an important role in the country’s economy. Tax-free agricultural earnings encourage farmers to invest in their farms and improve agricultural methods.

Gifts and Heritage

Gifts received by individuals in India are generally tax-free, provided they satisfy certain conditions laid down in section 56(2) of the Income Tax Act. Similarly, inherited property is not subject to income tax. This exemption has been given because imposing tax on gifts and inheritances will not increase family financial support and will hinder the transfer of money between generations.

Interest on PPF and EPF

Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund (EPF) is tax-free. These investments are encouraged because they promote long-term savings and financial security for individuals. The government encourages citizens to contribute to these plans by providing tax exemption on the interest earned.

Profit on long-term investment

Long-term capital gains (LTCG) arising from the sale of certain assets like equity shares and mutual funds are tax-free if they meet certain criteria. The government aims to encourage long-term investment in the capital market by providing this exemption. However, tax has to be paid on short-term capital gains.

HRA (House Rent Allowance)

House Rent Allowance (HRA) is a component of salary that can be tax-free. If the taxpayer fulfills certain conditions given in section 10(13A). The purpose behind this exemption is to reduce the financial burden on people living in rented houses.

It is noteworthy that it is important for taxpayers to understand the categories of tax-free income to customize their financial plan. These rebates are designed to support specific sectors, encourage long-term savings and provide relief in certain circumstances.

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But there are some sources from which the income does not come under the purview of tax. Apart from income from farming, there are many other incomes which are kept out of the tax purview. According to tax experts, section 10 of the Income Tax Act mentions such tax-exempt income. There are some incomes on which you do not have to pay any tax. Let us tell you about such income on which you can save tax.

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But there are some incomes which have been kept out of the scope of income tax. In such a situation, if you have not filed ITR till now, then know about 5 such types of income which are considered non-taxable in India.

1- Income from agriculture

Under Section 10 (1) of Income Tax, income from agriculture is completely tax-free. This includes the production, processing and distribution of wheat, rice, pulses and fruits. Apart from this, if any of your properties is being used for agricultural purposes, then the rent received from it is also tax-free. Not only this, income from the purchase and sale of agricultural land is also non-taxable.

2- Gifts received from relatives

If your close relatives give you gifts, then they are not taxed. Husband-wife, brother-sister, brother or sister of husband/wife, brother or sister of mother/father i.e. aunt, maternal uncle, paternal uncle, grandparents, grandparents of husband/wife, son or daughter and husband or wife of brother/sister are included in the list of close relatives. If they give you gifts, then it does not come under the purview of tax. Apart from this, gifts received on the occasion of marriage are tax-free, no matter what their amount is. If any friend or acquaintance of yours gives you a gift of up to 50 thousand rupees, then it is tax-free, but if he gives you a gift of more than this, then it comes under the purview of tax.

3- Income from gratuity

The gratuity received by a government employee after his death or retirement is completely tax free. On the other hand, according to the rules of the Gratuity Payment Act 1972, private sector employees do not have to pay tax on an amount up to a maximum of Rs 20 lakh on retirement.

4- Scholarship

Many institutions provide scholarships to students to complete their studies. These scholarships are tax free. The amount received on voluntary retirement up to Rs 5 lakh is tax free.

5- Some pensions are also tax free

The winners of gallantry awards like Mahavir Chakra, Param Vir Chakra, Vir Chakra do not have to pay any tax on the pension received. The pension received by the family members of the Indian Armed Forces is also tax free.

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The post Non Taxable Income: There is no tax on these 5 types of income, note this before filing ITR first appeared on Rightsofemployees.com.

This year the last date for filing income tax return is 31st July. If you are also preparing to file your return then it is important for you to know which income is taxed and which is not. By knowing this, you will not only be able to file your return correctly but will also save tax. Today we are telling you about those 10 incomes on which you do not have to pay income tax. Let us know about them.

1. Agricultural Income: Income from agriculture in India is completely exempt from income tax. This exemption is not only on the sale of crops, but it also includes rent received from agricultural land or buildings and profit earned from buying or selling agricultural land.
2. Interest income from NRE accounts: NRE accounts offer benefits such as tax-free interest on NRE deposits. NRIs can also transfer funds to their native place through NRE accounts.
3. Gratuity: In the private sector, employees who receive gratuity amount up to Rs 20 lakh on retirement are not required to pay income tax. 

Also Read: Why should the Finance Minister increase the 80C limit in Budget 2024?

1. Capital gains: Some capital gains are also tax-free. Individuals who receive compensation for urban agricultural land do not have to pay income tax.
2. Profit from Partnership Firm: Under the Income Tax Act, the income of a partnership firm is taxed at the entity level. Partners working for the firm do not pay income tax as they get a share of the profit after paying taxes. 
3. Scholarship: Students who receive scholarships from government and private institutions for their studies are exempted from income tax.
4. Provident Fund: Provident funds, mandatory savings schemes for companies registered under the Companies Act, 1956 in India, grow with age and become tax-free upon your retirement from the job. Employee Provident Fund offers tax-free returns, provided the employee has actively contributed for more than 5 years, even if they have changed employers during this period.
5. Tax-free pension: Pensions from certain organisations, such as the UNO, are exempt from tax. Family pensions received by dependents of employees are also tax-free.
6. Voluntary retirement: The amount received on voluntary retirement before retirement is exempt from tax up to Rs 5 lakh. Gifts received from relatives or on the occasion of marriage are also exempt from tax. 
7. Allowances or any compensation: Certain allowances are exempt from tax for any individual in India. For example, the foreign allowance provided by the Government of India to its employees working abroad is tax-free. Additionally, compensation received from Public Sector Undertaking (PSU) companies on voluntary or retirement is also exempt from tax. 

The post Non Taxable Income: There is no income tax on these 10 incomes, know this before filing the return first appeared on Rightsofemployees.com.

Agricultural Income

The most famous category of tax-free income is income from agriculture. Income earned from agricultural activities is free from income tax under Section 10(1) of the Income Tax Act, 1961. The logic behind this exemption is to support and promote the agriculture sector, which plays an important role in the country’s economy. Tax-free agricultural earnings encourage farmers to invest in their farms and improve agricultural methods.

Gifts and Heritage

Gifts received by individuals in India are generally tax-free, provided they satisfy certain conditions laid down in section 56(2) of the Income Tax Act. Similarly, inherited property is not subject to income tax. This exemption has been given because imposing tax on gifts and inheritances will not increase family financial support and will hinder the transfer of money between generations.

Interest on PPF and EPF

Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund (EPF) is tax-free. These investments are encouraged because they promote long-term savings and financial security for individuals. The government encourages citizens to contribute to these plans by providing tax exemption on the interest earned.

Profit on long-term investment

Long-term capital gains (LTCG) arising from the sale of certain assets like equity shares and mutual funds are tax-free if they meet certain criteria. The government aims to encourage long-term investment in the capital market by providing this exemption. However, tax has to be paid on short-term capital gains.

HRA (House Rent Allowance)

House Rent Allowance (HRA) is a component of salary that can be tax-free. If the taxpayer fulfills certain conditions given in section 10(13A). The purpose behind this exemption is to reduce the financial burden on people living in rented houses.

It is noteworthy that it is important for taxpayers to understand the categories of tax-free income to customize their financial plan. These rebates are designed to support specific sectors, encourage long-term savings and provide relief in certain circumstances.

The post Non Taxable income: No tax is imposed on these 5 types of income, Know the tax rules first appeared on Rightsofemployees.com.

Every taxpayer has to pay tax on the income derived from his business or employment. This tax is levied on a percentage of his income limit. But income tax also has provisions for non-taxable income. They are excluded from the ambit of income tax.

Under the Income Tax Act, 1961, income derived from agriculture is excluded from the ambit of income tax. Hindu undivided family income, income from immovable property or income from ancestral property are not taxed.

As per Section 56(ii) of the Income Tax Act, gifts including property, jewellery, money etc. given by a relative are exempt from tax. However, gift received from a person other than a relative is exempted only upto Rs.50 thousand.

The amount of gratuity received after the death or retirement of a government employee is completely tax free. Similarly, private sector employees get exemption on gratuity amount up to Rs 10 lakh received on account of retirement or disability. As per the Income Tax Act, tax relief on gratuity also depends on other factors.

Under Income Tax Act 10(15) certain interest on certain income is exempt from tax. This includes the interest earned on the Suvarna Vaoda Yojana, Local Authority and Infrastructure Bonds and the interest earned under the Sukanya Samriddhi Yojana. No tax is levied on it.

The post Non Taxable income: There is no tax on these five types of income, know the rules first appeared on Rightsofemployees.com.

Every taxpayer has to pay tax on the income derived from his business or employment. This tax is levied on a percentage of his income limit. But income tax also has provisions for non-taxable income. They are excluded from the ambit of income tax.

Under the Income Tax Act, 1961, income derived from agriculture is excluded from the ambit of income tax. Hindu undivided family income, income from immovable property or income from ancestral property are not taxed.

As per Section 56(ii) of the Income Tax Act, gifts including property, jewellery, money etc. given by a relative are exempt from tax. However, gift received from a person other than a relative is exempted only upto Rs.50 thousand.

The amount of gratuity received after the death or retirement of a government employee is completely tax free. Similarly, private sector employees get exemption on gratuity amount up to Rs 10 lakh received on account of retirement or disability. As per the Income Tax Act, tax relief on gratuity also depends on other factors.

Under Income Tax Act 10(15) certain interest on certain income is exempt from tax. This includes the interest earned on the Suvarna Vaoda Yojana, Local Authority and Infrastructure Bonds and the interest earned under the Sukanya Samriddhi Yojana. No tax is levied on it.

The post Non Taxable income: There is no tax on these five types of income, know the rules first appeared on Rightsofemployees.com.

Every taxpayer has to pay tax on the income derived from his business or employment. This tax is levied on a percentage of his income limit. But income tax also has provisions for non-taxable income. They are excluded from the ambit of income tax.

Under the Income Tax Act, 1961, income derived from agriculture is excluded from the ambit of income tax. Hindu undivided family income, income from immovable property or income from ancestral property are not taxed.

As per Section 56(ii) of the Income Tax Act, gifts including property, jewellery, money etc. given by a relative are exempt from tax. However, gift received from a person other than a relative is exempted only upto Rs.50 thousand.

The amount of gratuity received after the death or retirement of a government employee is completely tax free. Similarly, private sector employees get exemption on gratuity amount up to Rs 10 lakh received on account of retirement or disability. As per the Income Tax Act, tax relief on gratuity also depends on other factors.

Under Income Tax Act 10(15) certain interest on certain income is exempt from tax. This includes the interest earned on the Suvarna Vaoda Yojana, Local Authority and Infrastructure Bonds and the interest earned under the Sukanya Samriddhi Yojana. No tax is levied on it.

The post Non Taxable income: There is no tax on these five types of income, know the rules first appeared on Rightsofemployees.com.