Here’s looking at 5 major sources of income that are tax free in India.
New Delhi: Union Budget 2022, the most anticipated financial event in the calendar year, is all set to be announced on Tuesday, February 1 by Finance Minister Nirmala Sitharaman.
The one thing that the common man will be eagerly waiting to hear from the finance minister during Union Budget 2022 presentation is the announcement on Income tax, that have a direct bearing on their finances.
We can only wait for FM to spell out what she has in store for the common man, we could have a look at a few types of incomes which are exempt from the scope of Income Tax. Such type of incomes are known as tax-free incomes.
Here’s looking at 5 major sources of income that are tax free in India
Gift received from relatives
Gift received from relatives are exempt from tax by virtue of Section 56. The following will be considered as relative for the purpose of claiming such exemption.
(a) Spouse of the individual;
(b) Brother or sister of the individual;
(c) Brother or sister of the spouse of the individual;
(d) Brother or sister of either of the parents of the individual;
(e) Any lineal ascendant or descendent of the individual;
(f) Any lineal ascendant or descendent of the spouse of the individual;
(g) Spouse of the persons referred to in (b) to (f).
Agricultural income
Agricultural income is not taxable in the country. However, if you have non-agricultural income too, then while calculating tax on non-agricultural income, your agricultural income will be taken into account for rate purpose. Even if you have only agricultural income, you are advised to maintain some proof of your agricultural earnings/expenses.
Provident fund
Employee Provident Fund (EPF) offers tax-free returns for those employees who have had an active contribution for more than 5 years in his/her job. This is applicable even if the person has changed multiple organisations/employers in those 5 years.
Scholarships
Income earned on scholarship is tax free under sec 56(ii) of the Income Tax Act.
Salary Components
Chunks of your salary component that comes under reimbursement like transport allowance, meal coupons, mobile phone bills, internet bills, books and periodicals, leave travel allowance, leave travel concession etc is tax exempted.
