Income Tax News: Income tax is generally levied on almost every form of income, whether it be from salary, savings, business, or investments. However, there are certain sources of income where not a single rupee of tax is applied. Here’s a detailed breakdown of 10 such income sources that are exempt from taxation.
1. Earnings from Employee Provident Fund (EPF)
The contributions made to your Provident Fund (PF) account are exempt from tax under Section 80C of the Income Tax Act. Even the employer’s contributions are tax-exempt, provided the contribution does not exceed 12% of your basic salary. If it does, the excess amount will be taxed.
2. Returns from Shares and Equity Mutual Funds
If you invest in shares or equity mutual funds, returns of up to ₹1 lakh after one year of holding are tax-free. This comes under Long-Term Capital Gains (LTCG). Returns exceeding ₹1 lakh, however, will attract taxes as per last year’s budget provisions.
3. Wedding Gifts
Gifts received during your wedding are exempt from income tax. However, this only applies if the gift is given around the time of the wedding. For example, if your wedding is on March 16th and the gift is given six months later, it will not qualify for tax exemption. Additionally, gifts over ₹50,000 may still attract taxes.
4. Interest from Savings Accounts
Under Section 80TTA of the Income Tax Act, interest earned up to ₹10,000 from your bank savings account is tax-free. If your interest income exceeds ₹10,000, you will be taxed on the additional amount.
5. Share of Profit from a Partnership Firm
If you are a partner in a firm, the profits you receive are exempt from income tax. This is because the partnership firm itself already pays taxes on the profits. However, this exemption does not apply to the salary you receive from the firm.
6. Life Insurance Claim or Maturity Amount
The amount received from a life insurance policy—whether on maturity or as a claim—is tax-free. However, the annual premium of the policy must not exceed 10% of the sum assured. If the premium is higher, the additional amount becomes taxable. In the case of life insurance for disabled or seriously ill individuals, the premium can be up to 15% of the sum assured without incurring taxes.
These are just a few examples of income sources that remain untouched by tax liabilities, providing individuals with significant financial relief under specific conditions. For those looking to optimize their savings and investments, knowing these exemptions is crucial.
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