Under the provisions of Income Tax Act, there are various specified incomes which are totally exempted. Following are the incomes:
1. Agricultural Income : Income from agriculture is exempted from tax in India. If the Net agricultural income exceeds Rs. 5000, it is considered for determining rates of income tax on Incomes liable to tax.
2. Receipt from Hindu Undivided Family [HUF] : A sum received by a member of HUF, where such amount has been paid out of the income of the family or in case of impartable estate or income of the estate belonging to the family.
3. Partners share in the Firms Income : The partner’s share in the total Income of the Firm, which is separately assessed is exempt. Share of the partner of the firm shall be computed by dividing the taxable profits of the firm in the Profit Sharing Ratio mentioned in the Partnership Deed.
4. Interest on Securities or Bonds for Non-Residents : Any income from interest on securities or bonds specified by the Central Government in the official gazette up to 31.5.2002 is exempt as well as premium on redemption of bonds is exempt.
5. Interest on Non-Resident External account : Any income arising to a Non-Resident or who has been permitted by the RBI to maintain such account from interest on money standing to his credit in a Non-resident Account in India is exempt.
6. Interest on specified saving certificates : Interest on specified saving certificates of the Central Government which are issued before 1.6.2002 to a non-resident, are exempt, provided such certificates are subscribed to in convertible foreign exchange remitted from outside India through official.
7. Value of leave travel concession : Value of any leave travel concession received by the employee and his family or due to receive such concession, in connection with his proceeding on leave or after retirement of his service to any part of India, is exempted.
8. Income exempt in respect of foreigners : Following are the incomes exempted
a) Remuneration to an official of Embassy, High Commission, Legation, Affairs, Commissioner, Consulate or trade representative of a foreign State or as a member of staff of any of these officials. Remuneration to staff of the Ambassador, Consul de carries, trade commissioner, etc.
b) Remuneration received by employees of foreign Enterprises.
c) Salaries to non-residents employed on a foreign ship.
d) Remuneration received by certain foreigners, on training in certain Establishments.
9. Tax paid on behalf of a foreign company : The amount of tax paid by Government or an Indian concern on behalf of a foreign company in respect of royalty or fees for technical service paid under the agreement entered into after 31.3.1976 but before 1.6.2002 and approved by the Central Government, will not be included in computing the total income of foreign company
10. Amount of tax paid by Government or an Indian concern : The tax paid by Government or an Indian concern on behalf of a non-resident or a foreign company in respect of its income under an agreement entered into before 1.6.2002 will not be included in computing the total income of such non-resident or foreign company.
11. Tax paid by an Indian company on behalf of a foreign Government or enterprise : Such amount paid under an agreement entered after 31.3.199/ but before 1.4.1999 or entered after 31.3.2007 and approved by the Central Government, for acquiring an aircraft or an aircraft engine on lease, is exempt.
12. Income by way of royalty or fees for technical services : Received by a foreign company under an agreement with the Central Govt., in connection with projects of Indian Security are exempt.
13. Allowances/Perquisites for services rendered outside India : Paid or allowed outside India by the Government to an Indian citizen.
14. Income with any co-operative technical assistance program : An individual who is assigned duties in India in connection with any co-operative technical assistance program under an agreement between Government of India and a foreign Government receives remuneration from such foreign Government and any other income which accrues or arises outside India and is taxable in such reign country.