Incomes which do not Form Part of Total Income

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Income tax is charged on income earned by assessee in previous year. To provide relief in tax there are various exemptions and deductions that are provided. Exempted income is the income on which tax is not charged. Section 10 of Income Tax act provides various exempted incomes

AGRICULTURAL INCOME Section 10(1)
Agricultural income as defined in Section 2(1A) is exempt from income-tax in the case of all assessees.

MONEY RECEIVED BY AN INDIVIDUAL AS A MEMBER OF H.U.F. Section 10(2)
Sum received by an individual as a member of H.U.F. is wholly exempt from income-tax

SHARE OF PROFIT FROM PARTNERSHIP FIRM Section 10(2A)
Share income of a person received as a partner of a firm which is separately assessed as such is exempt from tax.

INTEREST INCOME OF NON-RESIDENTS Section 10(4)
Income from interest on such securities or bonds as the Central Government may specify in this behalf including income by way of premium on the redemption of such bonds is exempt from tax.

INTEREST INCOME OF NON-RESIDENTS FROM SPECIFIED SAVINGS CERTIFICATES Section 10(4B)

TRAVEL CONCESSION OR ASSISTANCE TO A CITIZEN OF INDIA Section 10(5)

ALLOWANCE PAYABLE OUTSIDE INDIA Section 10(7)
Allowances or perquisites paid or allowed by Governtment of India to Citizen of India working outside of India are exempt.

DEATH-CUM-RETIREMENT GRATUITY Section 10(10)
Other Employees Covered Under The Payment Of Gratuity Act, 1972: 
In case of employees covered under Gratuity Act 1972 Death Cum Retirement Gratuity will be exempted to the minimum of the following

1) Actual Amount Received
2) Last Salary × 15 × Completed years
                    26
3) Rs. 10,00,000.

Completed year: It means every completed year and part of year above Six months
Example.
11 yrs 6 month 0 days = 11 yrs
11 yrs 6 month 10 days = 12 yrs

Salary means Last salary Drawn by the employee including 
Basic + Total DA 

Other Employees Not Covered Under The Payment Of Gratuity Act, 1972: 
In case of employees covered under Gratuity Act 1972 Death Cum Retirement Gratuity will be exempted to the minimum of the following

1) Actual Amount Received
2) Average Salary × 15 × Completed years
                     30
3) Rs. 10,00,000.

COMPLETED YEAR: It means only completed year Example.
11 yrs 6 month 0 days = 11 yrs
11 yrs 11 month 15 days = 11 yrs

AVERAGE SALARY means 10 month average salary immediately preceding the month in which retirement/termination takes place. 

Salary means Basic + DA forming part of retirement Benefit + Commission earned on fixed turnover

 In case employee retires on 15 Jan 2014 average will be taken from 1 Mar 2014 to 31 Dec 2014.

In case of SEASONAL WORKER gratuity is paid for 7 days.

In case of PIECE RATED EMPLOYEE DAILY WAGES shall be calculated on average of 3 months immediately preceding the termination of employment. This excludes any over time payment.

These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter (Incomes which do not Form Part of Total Income) in CS Executive Module I Tax Laws & Practice (MCQ based OMR) Exam.

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