Every person in the country whose annual income is more than Rs 2.50 lakh, then he comes under the purview of income tax. However, it depends on the type of source of income whether it comes under the purview or not. In fact, there are some sources of income from which the earnings do not come under the purview of taxable income. However, with these exemptions a number of conditions also apply. Today, with these conditions, we will also tell about tax free income i.e. tax free income. For example, agriculture, gifts, gratuity amount, EPF and retirement amount etc.
Agriculture Income
Income From Agriculture Income from agriculture in the country is completely tax free. Farmers do not have to pay any direct tax on the income earned from farming.
Dividend Dividend sharing amount is exempt from tax under the Companies Act. That is because the company has already paid tax on the income. If you are a partner in a company, then the amount received as part of dividend is tax free. However, it is worth noting that the salary amount received from the company is not exempt from tax.
EPF In the case of EPF also, if the person withdraws the EPF amount after five consecutive years of service, then it remains tax free.
PPF On the other hand, if the PPF amount and the amount invested in Public Provident Fund i.e. PPF, the interest received on it and the amount received on completion of maturity period, all three are tax free.
Amount Of Gratuity A person gets gratuity after working in an organization for five consecutive years. This amount comes under tax free income. For government employees, gratuity up to Rs 20 lakh is included in the tax-free income. At the same time, only gratuity amount up to Rs 10 lakh for private sector employees is included in tax-free income.
Voluntary Retirement Amount At the same time, the amount received by government employees on taking premature retirement is tax free up to Rs 5 lakh.
Academic Scholarship Scholarships received from the government or any private organization for study or research are tax-free. All scholarships are exempt from tax net.
Family Money In India, the amount received by way of inheritance from an undivided Hindu family is also exempt from tax under section 10(2) of the Income Tax Act.
- These included money, jewelry and property from parents etc. Property, jewelry or cash amount inherited by the family is exempt from tax.
- Income tax is also not levied on the property or amount received through a will.
- However, the taxpayer has to prove that the amount or property in question has been inherited by him.
- At the same time, the amount received in the will will have to be taxed on the income earned by investing, earning from the property.
Gifts
Gifts The gifts you receive are subject to income tax.
- Gifts received by the income tax payer are taxable under section 56(2)(x) of the Income Tax Act, 1961. But in some circumstances, gifts are also exempted.
- Like Gifts received at the time of marriage do not have to be taxed. But these gifts, movable or immovable, in any form should not exceed the value of 50 thousand rupees.
- The difference between the date of the gift and the wedding should not be long. The prized gifts received from them are also tax free.
- These include gifts from husband or wife, brother or sister, husband or wife’s brother or sister.
- Property inherited or bequeathed, by brother or sister of parents.
- A gift from a close ancestor or descendant of the husband or wife.
- Gifts given by any member in a joint Hindu family. Discounts on gifts received from institutions
- Gifts received from a person local authority such as village panchayat, municipality, urban body committees and district board or cantonment board.
- Gifts received from any fund / institution / university or other educational institution, hospital or any other institution referred to in section 10 (23C).
- Gifts received from a charitable trust or religious institution registered under section 12A or 12AA also come under the tax-exempt category.
Interest on NRE Savings/FD Account In India, the interest earned by NRIs on NRE (Non Resident External) account is tax free. Interest earned on both NRE savings account and NRE FD accounts is also tax free.