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Exempt Income - What is Exempt Income? & Eligibility

What is Exempt Income?

Exempt Incomes are the incomes that are not chargeable to tax as per Income Tax law i.e. they are not included in the total income for the purpose of tax calculation while taxable Incomes are chargeable to tax under the Income Tax law.

Exempt income are those on which tax is not likely to be paid.Some examples are - dividend income, agricultural income etc.

Read More Complete lists of Tax Exempt Incomes.

 

Example of Exempted Income

 

  • Agricultural Income: Income derived from agricultural activities within India is given tax exemption under Section 10(1).

  • HRA (House Rent Allowance): Exemptions applicable to HRA are determined based on specific criteria including the actual HRA received, rent payments made, and components of salary.

  • Income for HUF (Hindu Undivided Family): Funds received by a member from the income of an HUF or from an impartible estate are exempt under Section 10(2).

  • Partner’s Share from a Firm: Profits distributed to a partner from a firm are exempt under Section 10(2A).

  • Interest to Non-Residents: Certain interest earnings are exempt for non-residents under Section 10(4).

 

Procedure for Filing the Tax

Filing income tax returns in India involves a series of steps. Here’s a simplified procedure to guide you through the process:

 

  • Calculate your income and tax: Determine your total income from all sources and calculate the tax liability based on the current tax slabs.

  • Obtain TDS certificates and Form 26AS: Collect all your TDS (Tax Deducted at Source) certificates and download Form 26AS from the TRACES website to verify tax credits.

  • Choose the right Income Tax Form: Depending on the nature of your income, select the appropriate ITR form.

  • Download the ITR utility: Visit the Income Tax Portal and download the ITR utility for offline filing or choose to file online.

  • Fill in your details: Enter all relevant information in the ITR form, including personal details, income details, deductions, and tax payments.

  • Validate the information: Ensure all the data entered is correct and complete.

  • E-file your returns: Log in to the e-filing website, navigate to the ‘e-file’ section, and submit your ITR.

  • Verify your return: After submission, e-verify your return through net banking, Aadhaar OTP, or by sending a signed ITR-V to CPC Bengaluru.

 

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