Tax Exemptions

These are some income, which do not come under the purview of Income Tax. If your income comes from these resources, you need not worry on the tax front.

1-Agriculture or any related work does not come under income tax boundary. If your father is a farmer and he gifts you a part of his income , then you don’t have to file tax returns with the condition that your father files tax return.

2-If you are a partner in the firm and its tax has been determined, then you will not be levied with any tax for the income from this firm. However, according to the Partnership Deed, your share of the amount of Profit would be taxable.

3-Any income upto Rs 5,000 (excluding prize money) that is not regular, can be reduced from your total income.

4-The money offered by your Company to you to roam along with your entire family anywhere in India, also covers the tax exemption limit. This claim can be made twice in 4 years.

5-Family includes your wife, children, parents, brother and sister (if both of these are dependent on you). However, if IT department enquires regarding this, then you have present original bills to support this.

6-The money that is result of any pension or death cum retirement gratuity scheme for an individual or his widow or his children or any of his dependent is eligible for tax exemption.
The gratuity money is calculated by multiplying the total years of service with half the amount of the average salary of previous ten months.

7-At the time of retirement if you accept cash in exchange for the rest of your vacation, then in this case also, there is no tax on this cash (applicable only for central/state government employees). Apart from government employees, the maximum period to encash the holidays is 10 months with the condition that each year the number of such holidays should not exceed 30.

8-In case of closure of the company, if you get something as compensation, then ypu need not have to bear the burden of income tax. VRS(voluntary retirement) money up to 5 million is also exempted from tax. Though the company offering VRS must have a structure for VRS as proposed by the Government.

9-Any kind of gain (including bonuses) from Life Insurance is not to be considered while calculating the total taxable income.

10- Any type of amount from Provident Fund which is valid under the PF Act and any kind of government PF fund covers the tax discount boundary.

11- If your company is paying your rent, this amount will not be taxable. However, if its your own house, then this rule does not apply.

12-Security Bond, Savings certificate or any type of investment issued by the Central Government get exemption benefits.

13-If you receive an award from an institution in the form of cash and it is the institution recognized by the Central or State Government, then you will get tax exemption benefit on this amount.

14-If you donate for PM’s Relief Fund, Student Fund or communal harmony Foundation Fund, this amount will be completely tax free.