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10 Incomes That Are Tax Free In Hands Of Investor In India
In India, we pay tax for most of the transactions we do by paying direct tax or indirect tax. The money collected as tax from tax payers will be used to develop the nation and for the welfare of it.
Over the years the govt has been considerate to exempt certain incomes. Here is a list of income which are tax free in hands of investor.
Agriculture Income
Agricultural income earned by individuals in India is exempt from tax. Any rent or any income derived from land is also eligible for Income tax rebate.
Leave salary
Leave encashment by an employee at the time of retirement is exempt from tax. The maximum amount as specified by the Government is Rs 3,00,000.
Travel Consession
An employee can claim exemption under section 10(5) in respect of Leave Travel Concession. Exemption is available in respect of value of any travel concession or assistance received or due to the employee from his employer for himself and his family members.
Life Insurance Policy
Any amount received under a life insurance policy, including bonus is exempt from tax. Note, that exemption is available only in respect of amount received from life insurance policy.
Pension
Any commuted pension, which is a accumulated pension in lieu of monthly pension received by a Government employee is fully exempt from tax.
If the employee receives gratuity, the commuted value of 1/3 of the pension is exempt, otherwise, the commuted value of ½ of the pension is exempt.
Saving Bank Interest income
The interest earned on savings accounts is exempt up to the limit of Rs 10,000. This amount is not included in Gross Total Income for the purpose of Income Tax.
Share of profit received by a partner
Share of profit received by a partner from a firm is exempt from tax in the hands of the partner. This exemption is limited only to share of profit and does not apply to interest on capital and remuneration received by the partner from the firm/LLP.
Dividend Income
Any income received in the form of dividend by investment in stocks or mutual funds is tax free in the hands of investors.
Long-term Capital Gains income
Any income arising from the transfer of a long-term capital asset will not attract income tax. However, these transactions are subject to securities transaction tax.
HUF Income
Any amount received out of HUF family income, or in case of impartible estate, amount received out of income of family estate by any member of such HUF is exempt from tax.
