There are various categories for tax exemptions in India depending on the nature of income. Some of the incomes that are exempt are agricultural income, pension, allowances, etc. There is also Deduction of Tax at Source that can be availed.
There are exemptions from tax like Property Tax and income tax if the taxpayer has children or dependents who depend on him for finances. The various sections of tax exemptions in India are as follows:
| Section | Nature of Income |
|---|---|
| 10(1) | Agricultural income |
| 10(2) | Share from income of Hindu Undivided Family |
| 10(2A) | Share of profit from firm whose taxes are filed separately |
| 10(3) | Income received in a casual form not exceeding Rs.5,000 and in case of horse race winnings, it should not exceed Rs.2,500 |
| 10(10D) | Receipt from life insurance policy |
| 10(16) | Scholarship to meet cost of education |
| 10(17) | Allowances of MP and MLA. MLA’s allowance should not exceed Rs.600 per month |
| 10(17A) | Awards and rewards by central and state government, from approved awards by others and the approved rewards from central and state government. |
| 10(26) | Income of members of scheduled tribes of North Eastern States or Ladakh region. The income should be arising from those regions itself. |
| 10(26A) | Income of Ladakh resident. His income can arise in Ladakh or outside India. |
| 10(30) | Subsidy from Tea Board under approved scheme |
| 10(31) | Subsidy from any concerned board under approved scheme of replantation |
| 10(32) | Income of minor clubbed with individual to a maximum of Rs.1,500 |
| 10(33) | Dividend earned from Indian companies, income from Unit Trust of India, Mutual funds and income from venture capital. |
| 10(A) | Profits earned in free trade zones, electronic hardware technology park or on software technology park for up to 10 years. |
| 10(B) | Profits form complete export oriented undertakings, manufacturing articles or computer software for 10 years. |
| 10(C) | Profits from newly established undertakings in IIDC or IGC in the North-Eastern region for up to 10 years. |
| 10(15)(i)(iib)(iic) | Interests, premiums, redemptions or any other payments that you get from securities, bonds, capital investment bonds, relief bonds, etc. that are notified. The exemption limit is to the extent that is notified. |
| 10(15)(iv)(h) | Interest paid by public sector company on its bonds and debentures. |
| 10(15)(iv)(i) | Interest that the government pays on the deposits made by employees of central and state government or public sector employees for their retirement under the notified scheme. |
| 10(15)(vi) | Interest received on notified gold deposit bonds. |
| 10(15)(vii) | Interest received on notified local authorities’ bonds |
| 10(5) | Leave travel assistance or concession received. The amount should not exceed the amount payable by the central government to its employees. |
| 10(5B) | Remuneration received by technicians who have specialised knowledge in specific fields. Their service must commence after 31.3.93 and their tax should be paid by the employer. The exemption limit is in respect of tax paid by employer for a period of up to 48 months. |
| 10(7) | Allowances and perquisites that the government provides to citizens of India who provide their services abroad. |
| 10(8) | Remuneration received from foreign governments for duties in India provided it is under cooperative technical assistance programmes. You also get exemption for income arising outside India provided that the tax on that income is paid by the government. |
| 10(10) | Death-cum retirement gratuity from government, payment made under Gratuity Act, 1972 the amount must be as per section(2), (3) and (4) of that Act and up to one and half month’s salary for each completed year of service. |
| 10(10A) | Commutation of pension from funds set by LIC under section 10(23AAB) and government, statutory corporation, etc. Commutation of pension from employers; when gratuity is payable, 1/3rd value of the pension and when gratuity is not payable, half of the pension. |
| 10(10AA) | Encashment of the earned leave that was unutilised from central or state government and from other employers up to an amount equal to 10 months’ salary or Rs.1,35,360, whichever is less. |
| 10(10B) | Retrenchment compensation, where the amount is either the amount under section 25F(b) of Industrial Dispute Act, 1947 or the amount that the government notifies, whichever is less. |
| 10(10C) | Amount received on voluntary retirement or on termination. The maximum limit is Rs.5 lakh. |
| 10(11) | Payment received under Provident Fund act, 1925 and other central government notified bonds. |
| 10(12) | Payments received from recognised provident funds to the extent provided in rule 8 of Part A of 4th schedule. |
| 10(13) | Payments received from approved superannuation fund. |
| 10(13A) | House rent allowance, the exemption is either the least of actual allowance, actual rent in excess of 10% of the salary or 50% of salary in Mumbai, Chennai, Delhi and Calcutta and 40% in other places. |
| 10(14) | Prescribes special allowance or benefits granted to meet expenses that incur in performing your duties, the exemption is granted to the extent of expenses that actually incur. |
| 10(18) | Pension that includes family pension of recipients of notified gallantry awards. |
There are exemption specifically for non-citizens, NRIs and for funds, institutions, etc.