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  Tax Planning

home > Tax Planning > Nuts & Bolts of IT > Exemptions
  • Exempted incomes are those incomes which are not taxable at all
  • It means that exemptions covers all those incomes earned, but they do not form part of your taxable income
  • Exemptions are covered under Section10 of the IT Act
bullet Some of the important exemptions are as under:
  1. Section 10(10D):
  Any sum received under a life insurance policy including sum allotted by way of bonus on such policy is exempted. This exemption does not apply to :
  • Keyman insurance policy
  • Insurance policy issued on or after 01/04/2003 in respect of which the premium payable for any of the years exceeds 20% of the actual sum assured.
  2. Section 10(15):
  Income by way of interest, premium on redemption or other payment securities, bonds or certificates etc., notified for this purpose. Few of the notified investments are as follows:
  • 12 year NSC
  • Treasury savings deposit certificates
  • National plan certificates
  • Post office cash certificates
  • National plan savings certificates
  • Post office NSC
  • Post office savings bank account etc.
  3. Section 10(32):
  In case of an individual, being a parent of a minor child, the parent can avail an exemption of Rs. 1,500 in respect of income of the each minor child.
  4. Section 10(34):
  Any income received by way of dividends is totally exempt in the hands of the receiver.
  5. Section 10(35):
  Any income in respect of units of a mutual fund is exempt.
  6. Section 10(36):
  Any income arising from the transfer of a long term capital asset being an eligible equity share in a company purchased on or after 1-03-03 to 1-03-04 will be exempt from tax, provided such transfer takes place after holding the shares for a period of 12 months or more.
  7. Section 10(13A):
  House rent allowance granted to an assessee by his employer is exempt to the extent of least of the following:
  • Excess of rent paid over 10% of salary
  • If accommodation is provided in the metros, 50% of salary, Else 40% of salary
  • Actual allowance received for the period
However, this exemption is not available to an assessee who lives in his own house or in a house in which he does not pay any rent.
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