How to fill exempt income details in ITR 1 Form?

I recently caught up with a school friend of mine.

What a great time we had! Recalling all those funny moments, making fun of teachers, sports day fun & sometimes getting into trouble.

And then our topic shifted to politics, economics and other random stuff. All of a sudden my friend asked me, I am facing troubles in filing my tax return, can you help?.

As he knew I am a tax consultant, so that question was pretty obvious on his part.

I said, Sure why not, tell me what's the problem. To which he said, I was trying to file my ITR 1 online & there was something related to exempt income details etc & I don't know what to write in that field.

I told him not to worry & I took out my laptop (yeah I am a workaholic haha!), started explaining him everything in detail.

While we file our ITR 1 form 2017-18 online, exempt income details are shown under 5th tab i.e. Taxes Paid & Verification.

Under this tab, you'll find head Exempt Income (For reporting purpose). Now you must be wondering, isn't exempt income tax free?

Yes, any exempt income earned by you is tax free but it does not mean that you don't have to disclose it.

Never make this mistake. Non-disclosure of income even if it is exempt, will make you liable to penalties & prosecution.

Now, let's go through this head & understand each component one-by-one.

Sec 10(38) (Exempted Long term Capital Gains)

Here you are required to report all your exempt LTCG income.

This exempt income is generally on sale of equity shares, equity oriented mutual fund & units of business trust.

When you buy & sell these securities after holding them for more than 12 months, then as per Sec 10(38) any capital gain on sale is exempt.

Therefore, you are required to report any such capital gain income in this head.

Sec 10(34) (Exempted Dividend Income)

Most of the investors buy shares to earn good dividend income.

When any registered indian company declares dividend then such income is exempt in the hands of shareholders u/s 10(34).

This exempt income of dividend must be reported in this head. But if your total dividend income exceeds ?10 Lakhs then you can't file ITR 1. In that case you need to file ITR 2.

Also, to check which ITR Form 2017-18 is applicable on your, refer our guide.

Agriculture Income

Agriculture income earned by you up to ?5000 is exempt & is required to be reported in ITR 1 form.

If your total agriculture income exceed ?5000 then you need to file ITR 2 as ITR 1 will no longer remain applicable.

Others

Under this head all the details relating to your partially exempt allowances/ payments received are filled.

In Nature of Income when you choose Select option, a drop down menu appears like the screenshot attached below.

From here, select the type of allowance/ payment that forms part of your gross salary. And in the Amount section, enter the exempt portion of such allowance/ payment.

If you have more than one allowance or payment then select Add option as given below.

Conclusion

After 2 cups of coffee & all this conversation, my friend finally understood about filing exempt income details.

He said, hey man! That's very easy. I was getting tensed without any reason. To which I replied, Tax is very easy dude! It's just that people do not receive proper guidance, make mistakes & then receive notices.

I hope that, just like my friend, you too were able to understand How to fill Exempt Income details in ITR 1.

Still if you face any kind of issue, our eCAs are here to help you 24×7. Just get in touch with them. Happy Filing ????