Many people are happy when they earn. But the problem is when it comes to paying tax on that income, why do they bother paying tax to the government on their hard-earned income? Some incomes in our country are completely exempted from tax. Let’s find out about ten such incomes.
Agricultural income:
There is complete tax exemption for agricultural income. There are no restrictions on this. This means that this exemption is also applicable to the income you earn by cultivating crops on your cultivated land and selling those crops or by renting out your cultivated land to someone else. However, if your annual agricultural income exceeds Rs. 5,000 and your total income exceeds the basic exemption limit, it is partially taken into account for calculating the tax rate.
PPF Income:
In our country, most of those who fall under the income tax bracket, especially employees, invest in the Public Provident Fund (PPF). Annual investments in this scheme are eligible for tax exemption under Section 80C up to Rs. 1.5 lakh. The interest earned on this scheme and the amount received after the expiry of the scheme are also eligible for full tax exemption. Investments and returns in this scheme are fully exempted from Exemption, Exemption, Exemption (EEE).
EPF Withdrawals:
There is no need to pay income tax on the amounts withdrawn from the Employees’ Provident Fund (EPF) account. This is applicable to the amounts deposited by the employee and the company as well as the interest paid on the EPF. Otherwise, the person withdrawing the money must have been a member of the EPF for at least five years. This exemption and the provision of minimum contribution for five consecutive years will continue in the new Income Tax Act, which will come into force from April 2026.
Life Insurance Maturity Amount:
The amount paid on the maturity of a life insurance policy or in the event of premature death of the policyholder is fully tax exempt. Otherwise, the premium paid for this purpose should not exceed 10 percent of the sum assured under the policy. However, this does not apply to the amount paid in the event of premature death of the policyholder.
Scholarships: The amount paid under scholarships is also fully tax exempt. Otherwise, this exemption is applicable only to scholarships paid to students.
Gifts
Gifts, inherited assets and income received from close relatives like parents, spouse, children are fully tax exempt without any limit. Gifts of immovable or movable assets received from non-relatives are exempt from tax only if the annual value of the gifts exceeds Rs. 50,000. This is considered as other income and taxed. If the stamp duty on the gift of immovable property without any consideration exceeds Rs. 50,000, the market value of the immovable property is considered for tax purposes.
Inherited assets through wills
There is no tax on inherited assets received through wills. However, only the income generated from these assets is subject to tax. For example, a will or a bank inheritance in the name of someone who has died after their death, deposits, loan documents are passed on to their heirs. Transferred. The person receiving the interest income is liable to pay income tax on it. The same principle applies to dividends on shares and mutual fund units. This income is added to the regular income of the individuals and taxed according to their slabs. These are available on the internet.
Sukanya Samriddhi Yojana (SSSI)
Under Section 80C, investments in the Sukanya Samriddhi Yojana (SSSI) scheme are eligible for full tax deduction up to Rs. 1.5 lakh in a financial year. The interest maturity amount received on this scheme is also fully tax deductible. This scheme has been introduced keeping in mind the future financial needs of girls in the country. Please read other posts as well
Tax Free Bonds:
The government or some public sector undertakings issue Tax Free Bonds (debt papers). The interest income on these bonds is fully tax deductible. More Information is available in Internet.
Gratuity:
The gratuity received by government employees is fully tax exempt. Whereas, in the case of private employees, tax exemption is available only up to Rs. 20 lakhs as per the provisions of the Income Tax Act.