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As a salaried or self-employed individual, you must be paying taxes every year by filing your Income Tax Returns (ITR). But were you aware of certain earnings that act as tax-free income in India? There exist some sources of income for which you do not have to pay taxes. Let’s run through the tax-free income sources list that you need to know about:
Under Section 10(1), income earned from an agricultural source is fully exempt and remains as a tax-free income in India. But if you are earning from agriculture then you need to regularly file your income tax returns.
You can claim a maximum deduction of INR 10,000 for the interest earned from a savings account under Section 80TTA. While youfile your ITR, you have to show the interest earned as your income from other sources for income tax exemption. This only applies to interest from a savings account and not a fixed deposit.
Under Section 10(2), the profit earned if you are a partner of any partnership firm is exempt from taxes. And if you receive any funds from LLP (Limited Liability Partnership) which is your share of the profit, that amount is non-taxable. But other thanthis, any other funds remain taxable.
If you have received any scholarship or grant to minimize the cost of education, it is exempted from taxes under Section 10(16). There is no limit to the maximum amount that can be received as a scholarship or award to be claimed as tax-free income.
Gratuity is paid to you by your employer as gratitude for your service for the company. The total gratuity amount received by a government employee is completely exempted from taxes. For a non-government employee, the least amount of the three give-below is exempted from tax:
The tax-free benefit holds good only if the gratuity is received on your retirement, termination, or on becoming incapacitated.
An amount of INR 5 lakhs received on taking voluntary retirement is exempt from tax only if the voluntary retirement scheme follows Rule 2BA of the Income Tax Rule.
If you get any money or inherit it as a member of HUF, the money is exempt from tax. The money received includes family income, impartible land or income from the family estate which can be claimed under Section 10(2).
If you receive any perquisites or allowances outside India for rendering any foreign services, it remains tax-free under Section 10(7).
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