Indian tax planners are working hard to introduce new taxes to retain the status "country of taxes". They have spared few tax free earning options for the assessee. Those who want to earn tax free income can chose these options. The tax free earning options are:
Interest received from Savings Bank Account - Section 80TTA of Income Tax Act, 1961
Upto amount of Rs. 10,000/- is allowed to be deducted under section 80TTA from taxable income. All the assesses who have earned interest income from savings bank account can claim maximum of Rs. 10,000/- under this section.
Long Term Capital Gain from sale of Mutual Fund and Shares- Section 10(38) of Income Tax Act, 1961
If the assessee paid security transaction tax at the time of purchase of shares, the long capital gain from sale of Equity shares and securities are exemption from payment of capital gain tax.
Dividend Income from Domestic Companies and Mutual Fund- Section 10(34) and Section 10(35) of Income Tax Act, 1961
Dividend Received on Investment is from domestic company is exempted from payment of tax under section 10(34) and Dividend received from Mutual Fund investment is exempted under section 10(35) of Income Tax Act.
Agricultural Income - Section 10(1) of Income Tax Act, 1961
Income from agriculture is exempted under section 10(1) of income tax Act 1961. But at the time of computation of income the amount should be shown for rate purpose.
Interest on Public Provident Fund Account - Section 10(11) of Income Tax Act, 1961
Amount of Interest received from PPF account is exempted from income tax. It is a tax free income in the hands of those who receive it.
Education Scholarship - Section 10(16) of Income Tax Act, 1961
Amount of scholarship received for education is exempted from payment of tax in the hands of person who receive it. As per section 10(16) of Income Tax Act, 1961 amount of scholarship for continuing education is tax exempted and it is not necessary to get the amount financed to get tax exemption.
Tax Exempted salary components
Some components of salary like House Rent Allowance (Section 10(13A), Leave Travel Allowance (Section 10(5), Pension Amount (Section 10(10A), Leave Encashment Section 10(10AA) etc are exempted from payment of tax subject to conditions in specific sections.
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