Question

Q3. Disuss the concept of "Exempt Income." Enumerate any Twelve
items of income which are totally Exempt from Income tax.​

Answer 1

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Exempt income is any income that isn't subject to federal tax. The types and thresholds for exempt income can be changed through the political process. Income from some types of investments, like muni bonds, qualify as exempt income. There are other types of income that are exempt from state level taxes.

Mentioned below is the list of income exempt from tax specific to Section 10:

1. Agriculture Income [Section 10(1)]
2. Amount received out of family income, Hindu Undivided Family (H.U.F.) [Section 10(2)]
3. Share of profit, [Section 10(2A)]
4. Interest paid to Non-Resident [Section 10(4)(i)]
5. Interest to Non-Resident on Non-Resident (External) Account [Section 10(4)(ii)]
6. Interest paid to a person of Indian Origin and who is Non-Resident [Section 10(4 B)]
7. Leave Travel Concession or Assistance [Section 10(5)]
8. Remuneration or Salary received by an individual who is not a citizen of India [Section 10(6)] a. Remuneration [U/s 10(6)(ii)] b. Remuneration received as an employee of foreign enterprise [U/s 10(6)(vi)] c. Employment on a foreign ship [U/s 10(6)(viii)] d. Remuneration received by an employee of foreign government [U/s 10(6)(xi)]
9. Tax paid by Government or Indian concern on Income of a Foreign Company [Section 10(6A), (6B), (6BB) and (6C)]
10. Perquisites/Allowances paid by Government to its Employees serving outside India [Section 10(7)]
11. Employees of Foreign Countries working in India under Cooperative Technical Assistance Programme [Section 10(8)]
12. Income of a Consultant [Section 10(8A)]

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Types of Exempt Income

Following are the types of income that are exempt from tax-

1. House Rent Allowance.
2. Allowance on transportation, children’s education, subsidy on hostel fee.
3. Exemption on Housing Loan.
4. Income defined as per Section 10, Section 54 of the Income Tax Act, 1961.
5. Leave and Travel Allowance.