Exempted Incomes

Meaning

Exempted incomes are those incomes which do not form part of total income under the Income Tax Act and are therefore completely exempt from tax. Such incomes are not included at all while computing taxable income.

Agricultural Income

Income earned from agricultural operations carried on in India is fully exempted from tax.

Share of Profit from a Partnership Firm

The share of profit received by a partner from a partnership firm is exempted by the hand of the partner, as the firm has already paid tax.

Scholarship Income

Scholarship granted to meet the cost of education is fully exempted from tax.

Life Insurance Policy Maturity Amount

Amount received on maturity of a life insurance policy is exempted from income tax, subject to prescribed conditions.

Allowances and perquisites of MPs and MLAs

Certain allowances and perquisites received by Member of Parliaments and State Legislatures are exempted from tax.

Income of Charitable or Religious trusts

Income derived by charitable or religious trusts is exempted if it is applied for charitable or religious purposes.

Gratuity received by Government Employees

Gratuity received by Government Employees on retirement or death is fully exempted from Income tax.

Exempted Incomes

1. Agricultural Income

2. Share of Partner from a Partnership Firm

3. Scholarship Income

4. Life Insurance Policy Maturity Amount

5. Allowances and Perquisites of MPs and MLAs

6. Income of Charitable or Religious trusts

7. Gratuity received by Government Employees