Non-Taxable Income: It’s important to be aware that there are certain types of income that are entirely tax-free. Understanding these exemptions can be crucial
When it comes to income tax, taxpayers are always on the lookout for ways to minimize their tax liability. While various investment schemes exist for this purpose, it’s important to be aware that there are certain types of income that are entirely tax-free. Understanding these exemptions can be crucial for effective tax planning.
Agriculture Income: Under the provisions of the Income Tax Act, 1961, income derived from agriculture is excluded from the purview of income tax. This exemption is significant for individuals involved in agricultural activities.
Hindu Undivided Family (HUF) Income: Income earned by a Hindu undivided family, income from immovable property, or income from ancestral property is not subjected to income tax.
Gifts from Relatives: According to Section 56(ii) of the Income Tax Act, gifts received from relatives, which can include property, jewellery, or money, are exempt from taxation. However, gifts received from non-relatives are exempt only up to a limit of Rs. 50,000.
Gratuity Amount: The gratuity received after the death or retirement of a government employee is entirely tax-free. Private sector employees also enjoy tax relief on gratuity, with amounts up to Rs. 10 lakh received upon retirement or due to disability being exempt. It’s worth noting that the tax treatment of gratuity can vary depending on other factors as well.
Interest on Specific Income: Certain interest income is exempt from taxation under Section 10(15) of the Income Tax Act. This includes interest earned on investments such as the Suvarna Vaoda Yojana, Local Authority and Infrastructure Bonds, and interest earned under the Sukanya Samriddhi Yojana. Such interest income remains tax-free.
