Curated By: Business Desk
Last Updated: September 05, 2023, 20:00 IST
Earning individuals are mandated to pay income tax if their income in a financial year exceeds the exemption limit. With a little planning and tax-saving investments the taxpayers can save money on their total tax liability. There are also different types of income, which are non-taxable. This means the earnings from these sources are exempted from income tax.
Let’s find out more about five types of non-taxable income sources in India.
1. Income from Agriculture: Revenue from agricultural sources is entirely tax-free under Section 10(1) of the Income Tax Act. This includes the production, processing, and distribution of crops like wheat, rice, pulses, and fruits. Additionally, rental income from property used for agricultural purposes is also tax-free, and income from the purchase and sale of agricultural land is non-taxable.
2. Gifts from Relatives and Inheritances: Income received from relatives, such as property, jewellery, or money, is not subject to tax under Section 56(ii) of the Income Tax Act. However, in case gifts are received from non-relatives, they are eligible for a tax exemption of only up to a limit of Rs 50,000. On the other hand, assets received from a Hindu Undivided Family (HuF) or through inheritance are also exempted from tax payments according to the Section 10(2) of the Income Tax Act.
3. Gratuity: Gratuity received upon the death or retirement of a government employee is entirely tax-free. Private sector employees also benefit from tax relief on gratuity up to Rs 10 lakh. Tax deductions on gratuity under the Income Tax Act depend on various other factors.
4. Scholarships and pensions: Various institutions provide scholarships to students so they can complete their education and this amount is completely tax-free. Additionally, pensions received by recipients of bravery awards like the Mahavir Chakra, Param Vir Chakra, and Vir Chakra, as well as certain other pensioners, are not subject to income tax.
5. Interest Income on Certain Savings Schemes: According to the Section 10(15) of the Income Tax Act, interest income earned on certain savings schemes is entirely tax-free. These schemes include the Sukanya Samriddhi Yojana (SSY), gold deposit bonds, and bonds issued by local authorities and infrastructure companies.
