Tax Exemption Consultation in Bangalore

Tax Exemption Consultation in Bangalore

A tax exemption is the right to have some or all of one's income exempt from country’s taxation. The majority of taxpayers are eligible for a number of exemptions that can be used to lower their taxable income, while some people and organisations are fully free from paying taxes.

A tax exemption is the right to have some or all of one's income exempt from country’s taxation. The majority of taxpayers are eligible for a number of exemptions that can be used to lower their taxable income, while some people and organisations are fully free from paying taxes. 

The Indian government offers a wide range of tax exemptions to raise investments and support particular economic activity.

Various Sections of Tax Exemptions in India

There are exemptions from tax like Property Tax and income tax if the taxpayer has children or dependents who depend on him for finances and sections are as follows:

Section

Nature of Income

10(1)

Agricultural income

10(2)

Share from income of Hindu Undivided Family

10(2A)

Share of profit from firm whose taxes are filed separately

10(3)

Income received in a casual form not exceeding Rs.5,000 and in case of horse race winnings, it should not exceed Rs.2,500

10 (4) 

Interest from notified bonds or NRE account 

10 (6) 

Income of foreign citizens like ambassadors and diplomats of foreign countries 

10 (7) 

Benefits received while serving the Indian government head 

10 (8) 

Payments from foreign governments for taxes due in India, so long as they fall within programmers for technical cooperation. If the government pays the tax on the income, the exemption also applies to income received outside of India. 

10 (10) 

Gratuity received by a government servant on retirement or death 

10 (10A) 

Commuted pension received from the government or statutory body 

10 (10AA) 

Leave encashment for central or state government employee 

10 (10B) 

Commission received by employees for retrenchment 

10(10D)

Receipt from life insurance policy

10(16)

Scholarship to meet cost of education

10(17)

Allowances of MP and MLA. MLA's allowance should not exceed Rs.600 per month

10(17A)

Awards and rewards by central and state government, from approved awards by others and the approved rewards from central and state government.

10 (18) 

Pension received gallantry award winners 

10 (19) 

Pension received by the family of armed forces personnel 

10(26)

Income of members of scheduled tribes of North Eastern States or Ladakh region. The income should be arising from those regions itself.

10(26A)

Income of Ladakh resident. His income can arise in Ladakh or outside India.

10(30)

Subsidy from Tea Board under approved scheme

10(31)

Subsidy from any concerned board under approved scheme of replantation

10(32)

Income of minor clubbed with individual to a maximum of Rs.1,500

10(33)

Dividend earned from Indian companies, income from Unit Trust of India, Mutual funds and income from venture capital.

10(A)

Profits earned in free trade zones, electronic hardware technology park or on software technology park for up to 10 years.

10(B)

Profits form complete export oriented undertakings, manufacturing articles or computer software for 10 years.

10(C)

Profits from newly established undertakings in IIDC or IGC in the North-Eastern region for up to 10 years.

10(15)(i)(iib)(iic)

Interests, premiums, redemptions or any other payments that you get from securities, bonds, capital investment bonds, relief bonds, etc. that are notified. The exemption limit is to the extent that is notified.

10(15)(iv)(h)

Interest paid by public sector company on its bonds and debentures.

10(15)(iv)(i)

Interest that the government pays on the deposits made by employees of central and state government or public sector employees for their retirement under the notified scheme.

10(15)(vi)

Interest received on notified gold deposit bonds.

10(15)(vii)

Interest received on notified local authorities' bonds

10(5)

Leave travel assistance or concession received. The amount should not exceed the amount payable by the central government to its employees.

10(5B)

Remuneration received by technicians who have specialised knowledge in specific fields. Their service must commence after 31.3.93 and their tax should be paid by the employer. The exemption limit is in respect of tax paid by employer for a period of up to 48 months.

10(7)

Allowances and perquisites that the government provides to citizens of India who provide their services abroad.

10(8)

Remuneration received from foreign governments for duties in India provided it is under cooperative technical assistance programmes. You also get exemption for income arising outside India provided that the tax on that income is paid by the government.

10(10)

Death-cum retirement gratuity from government, payment made under Gratuity Act, 1972 the amount must be as per section(2), (3) and (4) of that Act and up to one and half month's salary for each completed year of service.

10(11)

Payment received under Provident Fund act, 1925 and other central government notified bonds.

10(12)

th

10(13)

Payments received from approved superannuation fund.

10(13A)

House rent allowance, the exemption is either the least of actual allowance, actual rent in excess of 10% of the salary or 50% of salary in Mumbai, Chennai, Delhi and Calcutta and 40% in other places.

10(14)

Prescribes special allowance or benefits granted to meet expenses that incur in performing your duties, the exemption is granted to the extent of expenses that actually incur.

10(18)

Pension that includes family pension of recipients of notified gallantry awards.



HRA Exemption

House rent allowance is offered to employees to meet the cost of the rented house that is taken by them. Income Tax Act allows deduction in respect of the HRA that is paid. The exemption is covered under Section 10(13A) of the IT Act and Rule 2A of the IT Rules. However, you need to know that the entire House Rent Allowance is not deductible. The employee must pay rent and the rented premises can't be owned by him. If he is staying in his own house, then HRA is not deductible and the entire amount is subject to tax. The HRA exemption is the minimum of-

  • The actual HRA that is paid to the employee.
  • Actual rent paid minus 10% of your basic salary.
  • 50% of basic salary if you are living in a metro city, else 40% of your basic salary.

Salary is the basic pay plus the dearness allowance plus the commission fixed if applicable. For example, Mr. Harish living in Nashik receives Rs.5,000 basic salary each month and his monthly dearness allowance is Rs.1,000 and the HRA is Rs.2,000 and the actual rent he pays is Rs.2,000 each month, then his HRA exemption will be lower of:

  • Actual HRA received = Rs.2,000 x 12 = Rs.24,000
  • Rent paid in excess of 10% salary = [(Rs.2,000 x 12)- 10%(Rs.72,000*)] = 24,000- 7,200 = Rs.16,800.
  • 40% of his salary = Rs.28,800

*Note: Calculation of salary for HRA:

Basic salary = Rs.5,000 x 12 = Rs.60,000

Dearness allowance = Rs.1,000 x 12 = Rs.12,000

Total salary for HRA calculation = Rs.60,000 + Rs.12,000 = Rs.72,000

The exemption allowed to Mr. Harish is Rs,16,800 and the balance Rs.7,200 will be included in the computation of his gross salary.


Created & Posted by Navneet Kumar
CA Article at TAXAJ

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ

Watch all the Informational Videos here: YouTube Channel

TAXAJ Corporate Services LLP
Contact: 8961228919 ; 8802812345 | E-Mail: connect@taxaj.com

    • Related Articles

    • Professional Tax Registration in Bangalore

      Professional Tax Registration In Bangalore Professional tax is very much similar to income tax but the professional tax is collected by the state government. Professional tax registration in Bangalore can be obtained through TAXAJ. The maximum amount ...

    • Compliance with Income Tax on Salary in Bangalore

      Living and working in Bangalore offers numerous opportunities, but it also comes with responsibilities, including understanding and complying with income tax regulations. For salaried individuals, navigating income tax can be daunting, but with the ...

    • International Tax Planning in Bangalore

      International tax planning is a crucial aspect for individuals and businesses operating in Bangalore, India, who are engaged in cross-border transactions and investments. With Bangalore being a hub for multinational corporations and a center for ...

    • Capital Gains Tax Advisory in Bangalore

      When it comes to capital gains tax in Bangalore, it's essential to be aware of the tax implications and consider strategies to optimize your financial position. In Bangalore, our advisors can consider your exposure to capital gains tax on the profits ...

    • Double Taxation Avoidance Agreement (DTAA) Consultation in Bangalore

      Introduction: Bangalore, often hailed as the Silicon Valley of India, stands as a vibrant hub of technology, innovation, and economic dynamism. Amidst its bustling business landscape, concerns regarding double taxation frequently arise, particularly ...