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Under the provisions of Income Tax Act various benefits are provided to Individuals and HUF. Through this article and my next few articles let us discuss and understand about the benefits available.

First let us understand about basic exemption limits and relief available to Individual and HUF

Income Tax Benefits Available to Individuals and HUF - Part 1

Basic Exemption Limit (AY 2022-23)

Particulars

Amount (Rs)

Maximum amount which is not chargeable to tax in case of Individual/HUF

2,50,000

Maximum amount of income which is not chargeable to Income-tax in the hands of a resident senior citizen,who is at least 60 Years of age at any time during the previous year but less than 80 Years of age on the last day of the previous year

3,00,000

Maximum amount of income which is not chargeable to Income-tax in the hands of a resident super senior citizen who is at least 80 Years of age at any time during the previous year

5,00,000

Relief Available [AY 2022-23]

Particulars

Relief

Rebate to resident individual whose total income does not exceed Rs. 5,00,000 [Section 87A]

Tax payable but subject to maximum of Rs. 12,500

Concessional tax regime under section 115BAC (Applicable to Individual and HUF)

Option for payment of taxes at reduced rates (subject to certain conditions)

 

Income Exempt from Tax

Let us now discuss incomes which are exempt from tax.

S.N.

Section

Particulars

Limit of exemption

Available to

1

10(2)

Amount received by individual members from HUF. [Subject to the provisions of Section 64(2)]

Entire amount

Individual, being a member of an HUF

2

10(2A)

Share of profit received by partners from a partnership firm.

Entire amount

Partners in a partnership firm

3

10(4)(ii)

Interest on money standing to the credit in a Non-resident (External) account in India.

Entire amount

Person resident outside India (under FEMA Act) and person who has been permitted to maintain said account by RBI

4

10(4B)

Interest on notified savings certificates issued before 01-06-2002 by the Central Government and subscribed to in convertible foreign exchange.

Entire Amount

Individual, being a citizen of India or a person of Indian Origin, who is a non resident.

5

10(5)

Leave travel concession or assistance received by an employee (Subject to certain conditions and limited to amount actually spent)

Notes:

The amount should be received by employee from his employer or former employer for leave to any place in India during term of service or after retirement/termination;

Exemption shall be available for amount incurred in respect of fare for going anywhere in India by employee along with his family. The family means — her/his spouse and children, parents, brothers and sisters only when they are wholly or mainly dependent on the assessee.

The exemption can be availed for two journeys in a block of 4 calendar years.

Exemption shall be available for journey performed by a shortest route and by prescribed mode of transportations in prescribed situations.

Limited to amount actually spent and subject to maximum limits as specified

Individual - Salaried Employee

6

10(6)(ii)

Remuneration received by Foreign Diplomats/Consulate and their staff (Subject to conditions)

Entire Amount

Individual (not being a citizen of India)

7

10(6)(vi)

Remuneration received by non-Indian citizen as employee of a foreign enterprise for services rendered in India, if:

a) Foreign enterprise is not engaged in any trade or business in India

b) His stay in India does not exceed in aggregate a period of 90 days in such previous year

c) Such remuneration is not liable to deducted from the income of employer chargeable under this Act

Entire Amount

Individual - Salaried Employee (not being a citizen of India)

8

10(6)(viii)

Salary received by a non-resident, for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year.

Entire Amount

Non-resident Individual - Salaried Employee (not being a citizen of India)

9

10(6)(xi)

Remuneration received by an Individual, who is not a citizen of India, as an employee of the Government of a foreign state during his stay in India in connection with his training in any Government Office/Statutory Undertaking, etc.

Entire Amount

Individual - Salaried Employee (not being a citizen of India)

10

10(7)

Foreign allowances or perquisites paid or allowed by Government to its employees posted outside India

Entire Amount

Individual- Salaried Employee (being a citizen of India)

11

10(8)

Foreign income and remuneration received from Foreign Government in connection with any co-operative technical assistance programme and projects in accordance with agreement entered into by Central Government and Foreign Government (Subject to certain conditions).

Entire Amount

Individual

12

10(8A)

Foreign income and remuneration received by consultant (agreement relating to his engagement must be approved) out of funds made available to an international organization (agency) under a technical assistance grant agreement between that agency and the Government of a foreign State (Subject to certain conditions).

Entire Amount

Individual, being a:

a) A non-resident engaged by the agency for rendering technical services in India;

b) Non-Indian citizen; or

c) Indian citizen who is not ordinarily resident in India

13

10(8B)

Foreign income and remuneration received by an employee off the consultant as referred to in Section 10(8A) (contract of service must be approved by the prescribed authority before commencement of service).

Entire Amount

Individual, being a:

a) Non-Indian citizen; or

b) Indian citizen who is not ordinarily resident in India

14

10(9)

Income of any member of family of any individual [referred to in section 10(8), 10(8A) or 10(8B)] which accrues or arises outside India and is not deemed to accrue or arise in India and which is subject to tax in that foreign country

Entire Amount

Individual

15

10(10)

Death-cum-Retirement Gratuity received by:

(i) Government employees

Entire Amount

Individual - Salaried Employee

(ii) Other employees who are covered under Gratuity Act, 1972

Least of following amount is exempt from tax:

1. (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months.

2. Rs. 20,00,000#

3. Gratuity actually received.

*7 days in case of employee of seasonal establishment.

** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite

(iii) Other employees who are not covered under Gratuity Act, 1972

Least of following amount is exempt from tax:

1. 1/2 X Average Salary* X Completed years of service

2. Rs. 20,00,000

3. Gratuity actually received.

*Average salary = Average Salary of last 10 months immediately preceding the month of retirement

**Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission

16

10(10A)

Commuted value of pension received by:

a) Government employee

Entire Amount

Individual - Salaried Employee

   

b) Other employees

1. 1/3rd of full value of commuted pension, if gratuity is received by the employee

2. 1/2 of full value of commuted pension, if gratuity is not received by the employee

18

10(10AA)

Encashment of unutilized earned leave at the time of retirement by:

a) Government employee;

Entire Amount

Individual - Salaried Employee

   

b) Other employees

Least of the following shall be exempt from tax:

a) Amount actually received

b) Unutilized earned leave* X Average monthly salary

c) 10 months Average Salary**

d) Rs. 3,00,000

*While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer

**Average salary = Average Salary*** of last 10 months immediately preceding the retirement

***Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission

19

10(10B)

Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947. (Subject to certain conditions)

Least of the following shall be exempt from tax:

a) An amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947;

b) Rs. 5,00,000; or

c) Amount actually received.

Individual - Salaried Workmen

20

10(10BC)

Compensation received for any disaster from Government/ Local Authority (Subject to certain conditions)

Entire amount except for the amount allowed as deduction under this Act on account of loss caused by such disaster.

Individual or his Legal heir

21

10(10C)

Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions).

Least of the following is exempt from tax:

1) Actual amount received as per the guidelines i.e. least of the following

a) 3 months salary for each completed year of services

b) Salary at the time of retirement X No. of months of services left for retirement; or

2) Rs. 5,00,000

Individual - Salaried Employee

22

10(10CC)

Tax paid by the employer on perquisites (not provided for by way of monetary payments) given to employee

Entire Amount

Individual - Salaried Employee

23

10(10D)

Any sum received under a Life Insurance Policy including bonus (excluding Keyman Insurance Policy) (Subject to certain conditions)

Entire Amount

Any Assessee

 

The remaining incomes which are exempt from tax shall be dealt with in my next article.


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Category Income Tax, Other Articles by - Neethi V. Kannanth 



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