Unit-1

Assessee Income Tax Act 1961 (Act no. 43) defines 'assessee' as a person by whom any tax or any other s m of money is payab!e nder this Act" and inc! des # $%ery person in respect of whom any proceedin& nder this Act has been ta'en for the assessment of his income or of the income of any other person in respect of which he is assessab!e" or of the !oss s stained by him or by s ch other person" or the amo nt of ref nd d e to him or to s ch other person( $%ery person who is deemed to be an assessee nder any pro%ision of this Act(

$%ery person who is deemed to be an assessee in defa !t nder any pro%ision of this Act(

Assessment year Assessment year means the period of twe!%e months commencin& on 1st Apri! e%ery year and endin& on 31st )arch of the next year. Income of pre%io s year of an assessee is taxed d rin& the fo!!owin& assessment year at the rates prescribed by the re!e%ant *inance Act. Company +ection ,(1-) of the act defines company. The term company inc! des. 1. any Indian company ,. any corporate incorporated by or nder the !aws of co ntry o tside India 3. any instit tion" association or body which is or was assessab!e or was assessed as a company for any assessment year nder the 19,, Act or nder the 1961 act any instit tion" association or body" whether incorporated or not and whether Indian or non Indian" which is dec!ared by &enera! or specia! order of the board to be a company on!y for s ch assessment year or assessment years Convertible Foreign exchange This mean forei&n exchan&e which is for the time bein& treated by the /eser%e 0an' of India as con%ertib!e forei&n exchan&e for the p rposes of the *orei&n $xchan&e /e& !ation Act" 19-3 and any r !es made there nder. Foreign Exchange Asset This mean any specified asset which the assessee has ac1 ired" p rchased with or s bscribed to" in con%ertib!e forei&n exchan&e. Gross Total Incom 2nder the scheme of comp tation of tota! income nder the Income Tax Act" the income fa!!in& nder each head is to be comp ted as per the re!e%ant pro%isions of

the Act re!atin& to comp tation of income nder that head. The a&&re&ate of income nder each head is 'nown as '3ross Tota! Income' Income There is no specific definition of income b t for stat tory p rposes there are certain items which are !isted nder the head income. These items inc! de those heads a!so which norma!!y wi!! not be termed as income b t for taxation we consider them as income. These items are inc! ded nder section ,(,4) of the income tax act" 1961. As per the definition in section ,(,4)" the term income means and inc! des. profits and &ains di%idends

%o! ntary contrib tions recei%ed by a tr st created who!!y or part!y for charitab!e or re!i&io s p rposes or by an instit tion estab!ished who!!y or part!y for s ch p rposes the %a! e of any per1 isite or profit in !ie of sa!ary taxab!e nder c!a se (,) and (3) of section 1- of the act any specia! a!!owance or benefit" other than those inc! ded abo%e any a!!owance &ranted to the assessee either to meet his persona! expenses at the p!ace where the d ties of his office or emp!oyment of profits are ordinari!y performed by him or at a p!ace where he ordinari!y resides or to compensate him for the increased cost of !i%in& capita! &ains any s m char&eab!e to income tax nder section ,4 of the income tax act any winnin&s from !otteries" crossword p 55!es" races" inc! din& horse races" card &ames and &ames of any sort or from &amb!in& or bettin& of any form or nat re whatsoe%er any recei%ed as contrib tion to the assessee's pro%ident f nd or s perann ation f nd or any f nd for the we!fare of emp!oyees or any other f nd set p nder the pro%isions of the emp!yees state ins rance act profits on sa!e of a !icence &ranted nder the imports (contro!) order" 1966 made nder the imports and exports (contro!) act" 194-

Indian company Indian company means a company formed and re&istered nder the companies act" 1966. Any company formed and re&istered nder any !aw re!atin& to companies former!y in force in any part of India" other than 7amm and 8ashmir and the nion territories as specified or a corporation estab!ished by or nder a centra!" state or pro%incia! act or any instit tion" association or a body which is dec!ared by the board to be company nder section , (1-) are referred as Indian company. In the case of state of 7amm and 8ashmir" a company formed and re&istered nder any !aw for the

time bein& in force in the state. +imi!ar!y in case of nion territories. Investment Income This mean any income other than di%idends deri%ed from a forei&n exchan&e asset. Long term Capital Gains This mean income char&eab!e nder the head 9capita! &ains re!atin& to a capiat! asset bein& a forei&n exchan&e asset which is not a short term capita! asset. an!"act!re To 9man fact re9 is to prod ce new o t of the existin& materia!s.It f rther imp!ies transformation in to new and different artic!es ha%in& a distinct name"character or se.+ection,(f) of the :entra! $xcises and +a!t Act"1944 &i%es stat tory definition for 9man fact re9. #on $esident Indian %#$I& ;/I means an indi%id a! bein& a citi5en of India or a person of Indian ori&in who is not a resident. A person sha!! be deemed to be of Indian ori&in if he or either of his parents or any of his &rand parents was born in ndi%ided India. 'erson The income tax is char&ed in respect of the tota! income of the pre%io s year of e%ery 'person'. <ere the person means## 1. an indi%id a! . a nat ra! h man bein& i.e ma!e" fema!e minor or a person of so nd or nso nd mind ,. a <ind ndi%ided fami!y (<2*) 3. a company .
o o

any Indian company any body corporate incorporated by nder the !aws of a co ntry o tside India any instit tion" association or body whether Indian or non Indian" which is dec!ared by &enera! or specia! order of the board to be a company any instit tion" association or body which is or was assessab!e or was assessed as a company for any assessment year nder the Indian Income tax Act" 19,, or which is or was assessab!e or was assesses nder this act as a company for any assessment year commencin& on or before the 1st day of Apri!. 19-=

4. a firm i.e a partnership firm

6. an association of persons or a body of indi%id a!s whether incorporated or not 6. a !oca! a thority## means a m nicipa! committee" district board" body of port commissioners" or other a thority !e&a!!y entit!ed to or entr sted by the &o%ernment with the contro! and mana&ement of a m nicipa! or !oca! f nd. -. e%ery artificia!" > ridica! person" not fa!!in& within any of the abo%e cate&ories. 'revio!s year The *inancia! ?ear in which the income is earned is 'nown as the pre%io s year. Any financia! year be&ins from 1st of Apri! and ends on s bse1 ent 31st )arch. The financia! year be&innin& on 1st of Apri! ,==3 and endin& on 31st )arch ,==4 is the pre%io s year for the assessment year ,==4#,==6. 'rincipal (""icer Any p b!ic body or association of persons or any body of indi%id a!s or a company or a !oca! a thority is referred as the princip!e officer. They inc! de the secretary" treas rer" mana&er or a&ent of the a thority" company" association or body. A!so any person connected with the mana&ement or administration of the !oca! a thority" company" association or body pon which the assessin& officer has ser%ed a notice of his intention of treatin& him as the principa! officer. )peci"ied Asset This inc! des any of the fo!!owin& assets# 1. +hares in an Indian company ,. debent res iss ed by an Indian company which is not a pri%ate company as defined in the companies act" 1966 3. deposits with an Indian company which is not a pri%ate company 4. any sec rity of the centra! &o%ernment 6. nits of the nit tr st of India

6. + ch other assets as the centra! &o%ernment may specify in this beha!f by notification in the officia! &a5ette. $esidential )tat!s In India" as in many other co ntries" the char&e of income tax and the scope of taxab!e income %aries with the factor of residence. There are two cate&ories of taxab!e entities %i5. (1) residents and (,) non#residents. /esidents are f rther c!assified into two s b#cate&ories (i) resident and ordinari!y resident and (ii) resident b t not ordinari!y resident. The !aw prescribes two a!ternati%e technica! tests of residence for indi%id a! taxpayers. $ach of the two tests re!ate to the physica! presence of the taxpayer in India in the co rse of the @pre%io s yearA which wo !d be the twe!%e months from Apri! 1 to )arch 31.

A person is said to be @residentA in India in any pre%io s year if he a. is in India in that year for an a&&re&ate period of 14, days or more( or b. ha%in& within the fo r years precedin& that year been in India for a period of 366 days or more" is in India in that year for an a&&re&ate period of 6= days or more. The abo%e pro%isions are app!icab!e to a!! indi%id a!s irrespecti%e of their nationa!ity. <owe%er" as a specia! concession for Indian citi5ens and forei&n citi5ens of Indian ori&in" the period of 6= days referred to in :!a se (b) abo%e" wi!! be extended to 14, days in two cases. (i) where an Indian citi5en !ea%es India in any year for emp!oyment o tside India( and (ii) where an Indian citi5en or a forei&n citi5en of Indian ori&in (;/I)" who is o tside India" comes on a %isit to India. In the abo%e context" an indi%id a! %isitin& India se%era! times d rin& the re!e%ant @pre%io s yearA sho !d note that > dicia! a thorities in India ha%e he!d that both the days of entry and exit are co nted whi!e ca!c !atin& the n mber of days stay in India" irrespecti%e of howe%er short the time spent in India on those two days may be. A @non#residentA is mere!y defined as a person who is not a @residentA i.e. one who does not satisfy either of the two prescribed tests of residence. An indi%id a!" who is defined as /esident in a &i%en financia! year is said to be @not ordinari!y residentA in any pre%io s year if he has been a non#resident in India 9 o t of the 1= precedin& pre%io s years or he has d rin& the - precedin& pre%io s years been in India for a period of" or periods amo ntin& in a!! to" -,9 days or !ess. Ti!! 31st )arch ,==3" @not ordinari!y residentA was defined as a person who has not been resident in India in 9 o t of 1= precedin& pre%io s years or he has not d rin& the - precedin& pre%io s years been in India for a period of" or periods amo ntin& in a!! to" -3= days or more. +ection 6 of the Income#tax Act" 1961" prescribes the tests for determinin& the residentia! stat s of a person. +ection 6" as amended" reads as fo!!ows. *or the p rposes of this Act" (1) An indi%id a! is said to be resident in India in any pre%io s year" if he a. is in India in that year for a period or periods amo ntin& in a!! to one h ndred and ei&hty#two days or more( b. ha%in& within the fo r years precedin& that year been in India for a period or periods amo ntin& in a!! to three h ndred and sixty fi%e days or more" is in India for a period or periods amo ntin& in a!! to sixty days or more in that year.

Unit-*
+i""erent ,eads o" Income

- heads o" income in the Indian Income Tax Act. 1/01 Income is c!assified nder fi%e heads in the Indian Income Tax Act. $ach year" yo or yo r 1 a!ified chartered acco ntant is expected to p t a!! yo r earnin&s or incomes nder these 6 heads of income for ca!c !atin& tax. <ere is a sma!! primer of what these 6 heads of income mean and what a!! they consist of.

Income from salary Income from house property Profits and gains of business or profession Capital gains Income from other sources Income from salary: -Income

can be char&ed nder this head on!y if there is an emp!oyer emp!oyee re!ationship between the payer and payee. +a!ary inc! des basic sa!ary or wa&es" any ann ity or pension" &rat ity" ad%ance of sa!ary" !ea%e encashment" commission" per1 isites in !ie of or in addition to sa!ary and retirement benefits. The a&&re&ate of the abo%e incomes" after exemptions a%ai!ab!e" is 'nown as 3ross +a!ary and this is char&ed nder the head income from sa!ary . 0asic sa!ary a!on& with commissions and bon ses is f !!y taxab!e.

Income from house Property: -Any

residentia! or commercia! property that yo own wi!! be taxed as we!!. $%en if yo r piece of rea! estate is not !et o t" it wi!! be considered earnin& renta! income and yo wi!! need to pay tax on it. The income tax b!o'es are a bit easy &oin& on this B they tax yo on the capacity of the rea! estate to earn income and not the act a! rent. This is ca!!ed the propertyCs Ann a! Da! e and is the hi&her of the fair renta! %a! e" rent recei%ed or m nicipa! rent. The Ann a! Da! e can &o thro &h a standard ded ction of 3=E and if yo red ce the interest on borrowed capita!" then yo &et the %a! e which is char&ed nder the head income from ho se property.

 Profits and gains of business or profession: -

Frofits and &ains of b siness or profession. # Income earned thro &h yo r profession or b siness is char&ed nder the head @profits and &ains of b siness or professionA. The income char&eab!e to tax is the difference between the credits recei%ed on r nnin& the b siness and expenses inc rred. The ded ctions a!!owed are depreciation of assets sed for b siness( rent for premises( ins rance and repairs for machinery and f rnit re( ad%ertisements( tra%e!in& and many more.

Capital gains
Any profit or gain arising from transfer of capital asset held as investments are chargeable to tax under the head capital gains. Hop over to the Long Term and Short Term capital gains article to read more about this. Might be orth reading to see ho indexation is used in long term capital gains scenario to reduce tax outgo.

Income from other sources

Any income that does not fall under the four heads above is taxed under the head income from other sources. An example is interest income from ban! deposits" inning from lottery" any sum of money exceeding #s. $%"%%% received from a person &other than from relative" on marriage" under a ill or inheritance'. Here is a snapshot of the above $ heads of income" courtesy (utloo! Money.

)mage from (utloo! Money

Unit-1
Income Tax +ed!ction !nder Income Tax Act

India Income Tax Act- Tax Deductions, Tax Exemptions !D !DD !E !"" #$ !"

!C

There are %ario s Income tax ded ctions or tax exemptions as a!!owed by the Indian Income tax Act. These tax ded ctions a!!ow yo to s btract an amo nt from yo r taxab!e income and th s he!p yo to sa%e taxG 2nderstandin& these income tax exemptions can he!p yo sa%e tens o" tho!sands o" r!pees in income tax e%ery year. 0e!ow I ha%e !isted a!! important income tax ded ctions in a tab!e" and then after the tab!e there is an exp!anation of each section of Indian Income tax act in detai!. I hope these ded ction and tax exemption !imits wi!! he!p yo for yo r tax p!annin& this year. I ha%e a!so inc! ded !in's to the officia! pa&e of Indian Income Tax so yo can act a!!y &o there and %erify the information yo rse!f. Indian Income Tax ded!ctions. Tax exemption limits Financial year *2234*22/ %5ill be !pdated later "or *22/4*212& Income Tax +ed!ctions Explaination Income Tax ded ction # +ection 4=: Fro%ident * nds" Hife Ins rance premia" $H++" 0an' deposits (I6 yr.)" t tion fees" principa! part of $)I on ho sin& !oan" etc. axim!m ded!ction allo5ed $emar6s
)axim m tax ded ction or tax exemption !imit.

$s7 1.22.222

)axim m tax ded ction or tax exemption !imit.

Income Tax ded ction # +ection 4=J Fremi m in hea!th ins rance of yo " yo r spo se" chi!dren or dependent parents

$s7 1-222 (tax exemption !imit

for senior citizen is

$s7 *2222) Income Tax ded ction # +ection 4=JJ )edica! treatment (inc! din& ins rance) of disab!ed dependent
)axim m tax ded ction or tax exemption !imit.

$s7 -2222. ($s7 8-222 if disabi!ity is se%ere" e.&. I4=E)

)axim m tax ded ction or tax exemption !imit.

Income Tax ded ction # +ection 4=$ Interest paid on ed cationa! !oan ta'en for hi&her ed cation of yo " yo r spo se or chi!dren.

no limit 9

Income Tax ded ction # +ection 4=33 <o se rent in excess of 1=E of income" if no

)axim m tax ded ction or tax exemption !imit.

</A is recei%ed.

$s7 *222 per month or *-: o" yo!r gross salary" whiche%er !ess.

Income Tax ded ction # +ection ,4 Interest paid on ho sin& !oan.

)axim m tax ded ction or tax exemption !imit.

$s7 1.-2.222
)axim m tax ded ction or tax exemption !imit.

Income Tax ded ction # +ection 4=3 Jonations

122: of donation amo nt for specia! f nds(see be!ow)" -2: of donation amo nt for a!! other donations.

Indian Income Tax ded!ction - +ection 4=: of Indian Income Tax Act is the most pop !ar beca se it is direct!y re!ated to tax ded ctions for yo r month!y sa%in&s or !ife ins rance. In financia! years ,==4K,==9 and a!so in ,==9K,=1= the maxim m income tax ded ction a!!owed nder section 4=: is 1"=="===. The fo!!owin& is a !ist of important ways in which a taxpayer can &et benefit of section 4=: of Indian Income Tax Act. 1. 'rovident F!nd %'F&. Any contrib tions to Fro%ident * nd" Do! ntary pro%ident * nd (DF*) or sa%in&s made in F b!ic Fro%ident * nd (FF* Acco nt) are e!i&ib!e for income tax ded ction nder section 4=: of Indian Income Tax Act. ,. Li"e Ins!rance 'remi!ms. Any Hife Ins rance premi ms (for one or more ins rance po!icies) paid by yo for yo " yo r spo se or yo r chi!dren are e!i&ib!e nder income tax ded ction nder section 4=: of Indian Income Tax Act. 3. EL)) E;!ity Lin6ed )aving )chemes. Any in%estment made in certain ) t a! * nds ca!!ed e1 ity !in'ed sa%in& schemes 1 a!ifies for section 4=: ded ction. F!ease note that not a!! m t a! f nd in%estments are e!i&ib!e for this ded ction. +ome examp!es of $H++ f nds are . +0I )a&n m Tax 3ain" <J*: Tax +a%er" <J*: Hon& term ad%anta&e" etc. 4. ULI' %Unit Lin6ed Ins!rance 'lan&. In%estments made in certain 2HIFs of 2nit Tr st of India and HI: of India are e!i&ib!e for 4=: ded ction. 6. <an6 Fixed deposits or Term deposits o" =- years . Accordin& to a re!ati%e!y new pro%ision amo nt sa%ed in fixed deposits of term at !east fi%e years is e!i&ib!e for income tax ded ction nder section 4=: of Indian Income Tax Act. 6. 'rincipal part o" E I on ,o!sing Loan . If yo are payin& $)I on a ho sin& !oan" note that the $)I (e1 ated month!y insta!!ments) consists of two parts # principa! part and interest part. The principa! part of the $)I on yo r ho sin& !oan is e!i&ib!e for income tax ded ction nder section 4=:. ;ote that the interest part is a!so e!i&ib!e for tax ded ction" howe%er not nder section 4=:

b t section ,4. (/ead be!ow). If yo do not own a ho se b t pay rent for it" see section 4=33 of Indian Income Tax Act be!ow. -. T!tion Fees. Amo nt paid as t tion fee for the ed cation of two chi!dren of the assessee is e!i&ib!e for ded ction nder section 4=: of Indian Income Tax Act. 4. (ther 32C ded!ctions. Amo nt sa%ed in ;ationa! +a%in& :ertificate (;+:)" Infrastr ct re 0onds or Infra 0onds" amo nt paid as stamp d ty and re&istration char&es whi!e b yin& a new home are e!i&ib!e for income tax ded ctions nder section 4=: of Indian Income Tax Act. Indian Income Tax ded!ction - )ection 32+ . +ection 4=J of Indian Income Tax Act is especia!!y sef ! if yo r emp!oyer does not co%er yo r hea!th or medica! expenses. It is a &ood idea to &et medica! ins rance or hea!th ins rance for yo " yo r spo se" dependent chi!dren or dependent parents" as yo can c!aim a ded ction of p to /s. 16===K# per ann m for the premi m paid on this ins rance. *or senior citi5en this !imit is /s. ,====. Lith effect from 1#4#,==9" yo can c!aim the tota! of the fo!!owin& items for ded ction nder section 4=J. 1. Tota! amo nt of premi m paid for hea!th ins rance of fami!y (meanin& spo se M chi!dren)" or /s. 16"===" whiche%er !ess. ,. Tota! amo nt of premi m paid for hea!th ins rance of yo r parents or /s. 16"===" whiche%er !ess. Th s if yo are payin& premi ms of medic!aim po!icies for yo r spo se chi!dren and parents yo can &et a tota! tax ded ction of p to /s. 3="===. Indian Income Tax ded!ction - )ection 32++ . +ection 4=JJ of Indian Income Tax Act pro%ides pro%ision for tax ded ction if yo inc rred medica! expendit re for a dependent who are disab!ed. <ere dependent means spo se" chi!dren" brothers" sisters or any one of them. The maxim m tax ded ction pro%ided by section 4=JJ is /s. 6==== in case of ordinary disabi!ity and /s. -6=== if the disabi!ity is se%ere. The definition of se%ere disabi!ity is as defined in the officia! pa&e of Indian Income tax Act. Indian Income Tax ded!ction - )ection *> . Lhene%er yo ta'e a ho sin& !oan b i!d or b y a new home" the interest payab!e on this home !oan is e!i&ib!e for income tax ded ction nder section ,4. )axim m ded ctib!e amo nt" i.e. maxim m interest yo can c!aim for income tax ded ction nder section ,4 is /s. 1" 6="===. In case yo are payin& interest on money borrowed for reno%ation of yo r home" e%en this may 1 a!ify for tax ded ction nder section ,4 of Indian Income Tax Act. (+ee officia! pa&e or as' in a comment). Indian Income Tax ded!ction - )ection 32GG If yo pay rent for the ho se that yo are stayin& in and do not &et </A" any rent yo pay in excess of 1= percent of yo r sa!ary is e!i&ib!e for income tax ded ction nder section 4=33 of Indian Income Tax Act. The income tax ded ction yo can c!aim is the minim m of the fo!!owin& amo nts. 1. /ent yo pay min s 1=E of yo r sa!ary.

,. ,6E of yo r &ross tota! income. 3. /s. ,===K# per month. Indian Income Tax ded!ction - )ection 32E . 2nder section 4=$ of Indian Income Tax Act" any amo nt of interest paid on ed cationa! !oan ta'en for yo r hi&her ed cation or hi&her ed cation of yo r h sband K wife or chi!dren is ded ctib!e from yo r taxab!e income. <ere hi&her ed cation means # st dies for any &rad ate or post# &rad ate co rse in en&ineerin&" medicine" mana&ement or for post#&rad ate co rse in app!ied sciences or p re sciences inc! din& mathematics and statistics. Indian Income Tax ded!ction - )ection 32G . Jonations made to f nds !i'e Frime )inister's /e!ief * nd" ;ationa! :hi!dren *o ndation" any 2ni%ersity or ed cationa! instit tion of 'nationa! eminence'" etc. (see officia! pa&e for comp!ete !ist) are ded ctib!e from yo r taxab!e income accordin& to section 4=3 of Indian Income Tax Act. *or any other donations yo are e!i&ib!e to ta'e income tax ded ction for 6=E of the donation amo nt. +ee the officia! pa&e of Indian Income Tax Act.

Unit->
2nder the pro%isions of Income Tax Act" there are %ario s specified incomes which are tota!!y exempted. *o!!owin& are the incomes. 1. A&ric !t ra! Income . Income from a&ric !t re is exempted from tax in India. If the ;et a&ric !t ra! income exceeds /s. 6===" it is considered for determinin& rates of income tax on Incomes !iab!e to tax. ,. /eceipt from <ind 2ndi%ided *ami!y N<2*O . A s m recei%ed by a member of <2*" where s ch amo nt has been paid o t of the income of the fami!y or in case of impartab!e estate or income of the estate be!on&in& to the fami!y. 3. Fartners share in the *irms Income . The partnerCs share in the tota! Income of the *irm" which is separate!y assessed is exempt. +hare of the partner of the firm sha!! be comp ted by di%idin& the taxab!e profits of the firm in the Frofit +harin& /atio mentioned in the Fartnership Jeed. 4. Interest on +ec rities or 0onds for ;on#/esidents . Any income from interest on sec rities or bonds specified by the :entra! 3o%ernment in the officia! &a5ette p to 31.6.,==, is exempt as we!! as premi m on redemption of bonds is exempt. 6. Interest on ;on#/esident $xterna! acco nt . Any income arisin& to a ;on#/esident or who has been permitted by the /0I to maintain s ch acco nt from interest on money standin& to his credit in a ;on#resident Acco nt in India is exempt. 6. Interest on specified sa%in& certificates . Interest on specified sa%in& certificates of the :entra! 3o%ernment which are iss ed before 1.6.,==, to a non#resident" are exempt" pro%ided s ch certificates are s bscribed to in con%ertib!e forei&n exchan&e remitted from o tside India thro &h officia!.

-. Da! e of !ea%e tra%e! concession . Da! e of any !ea%e tra%e! concession recei%ed by the emp!oyee and his fami!y or d e to recei%e s ch concession" in connection with his proceedin& on !ea%e or after retirement of his ser%ice to any part of India" is exempted. 4. Income exempt in respect of forei&ners . *o!!owin& are the incomes exempted a) /em neration to an officia! of $mbassy" <i&h :ommission" He&ation" Affairs" :ommissioner" :ons !ate or trade representati%e of a forei&n +tate or as a member of staff of any of these officia!s. /em neration to staff of the Ambassador" :ons ! de carries" trade commissioner" etc. b) /em neration recei%ed by emp!oyees of forei&n $nterprises. c) +a!aries to non#residents emp!oyed on a forei&n ship. d) /em neration recei%ed by certain forei&ners" on trainin& in certain $stab!ishments. 9. Tax paid on beha!f of a forei&n company . The amo nt of tax paid by 3o%ernment or an Indian concern on beha!f of a forei&n company in respect of roya!ty or fees for technica! ser%ice paid nder the a&reement entered into after 31.3.19-6 b t before 1.6.,==, and appro%ed by the :entra! 3o%ernment" wi!! not be inc! ded in comp tin& the tota! income of forei&n company 1=. Amo nt of tax paid by 3o%ernment or an Indian concern . The tax paid by 3o%ernment or an Indian concern on beha!f of a non#resident or a forei&n company in respect of its income nder an a&reement entered into before 1.6.,==, wi!! not be inc! ded in comp tin& the tota! income of s ch non#resident or forei&n company. 11. Tax paid by an Indian company on beha!f of a forei&n 3o%ernment or enterprise . + ch amo nt paid nder an a&reement entered after 31.3.199K b t before 1.4.1999 or entered after 31.3.,==- and appro%ed by the :entra! 3o%ernment" for ac1 irin& an aircraft or an aircraft en&ine on !ease" is exempt. 1,. Income by way of roya!ty or fees for technica! ser%ices . /ecei%ed by a forei&n company nder an a&reement with the :entra! 3o%t." in connection with pro>ects of Indian +ec rity are exempt. 13. A!!owancesKFer1 isites for ser%ices rendered o tside India . Faid or a!!owed o tside India by the 3o%ernment to an Indian citi5en. 14. Income with any co#operati%e technica! assistance pro&ram . An indi%id a! who is assi&ned d ties in India in connection with any co#operati%e technica! assistance pro&ram nder an a&reement between 3o%ernment of India and a forei&n 3o%ernment recei%es rem neration from s ch forei&n 3o%ernment and any other income which accr es or arises o tside India and is taxab!e in s ch rei&n co ntry. 16. Income of a :ons !tant . Income of a cons !tant who is en&a&ed by an internationa! or&ani5ation (a&ency) for renderin& technica! ser%ices in India in connection with any technica! assistance pro&ramme between the :entra! 3o%ernment and the a&ency.

16. Income of a fami!y member of a technica! assistantK :ons !tantK $mp!oyee . Income of a fami!y member of an indi%id a! referred abo%e" accompanyin& him to India" which accr es or arises o tside India and is !iab!e to tax in that forei&n +tate or the co ntry of ori&in of s ch member. 1-. Jeath#c m#retirement &rat ity. 1. Any death#c m#retirement &rat ity nder the Fension / !es of the :entra! 3o%ernment and +tate 3o%ernment emp!oyees. ,. Any &rat ity recei%ed nder the Fayment of 3rat ity Act. 3. Any other &rat ity recei%ed by the emp!oyee" his widow or dependents to the extent it does not exceed one#ha!f month's sa!ary for each year of comp!eted ser%ice ta'in& a%era&e sa!ary of ten months s b>ect to a maxim m of /s. 3"6="===. 14. :omm ted Fension. Any payment in comm tation of pension . i. /ecei%ed nder the :i%i! Fension :omm tation / !es or nder any other scheme by a :entra!K+tate 3o%ernment emp!oyee. ii. /ecei%ed from a pension f nd (7ee%an + ra'sha) set p by Hife Ins rance :orporation iii. /ecei%ed from any other emp!oyer s b>ect to the !imit not exceedin& a) 1K3rd of the comm ted %a! e of s ch pension in case where the emp!oyee recei%ed any &rat ity. b) In any other case 1K, of the comm ted %a! e of s ch pension. 19. :ompensation to $mp!oyee . Any compensation recei%ed by a wor'man nder Ind stria! Jisp tes Act or notification iss ed there nder or nder any standin& order or contract of ser%ice or otherwise at the time of his retrenchment is exempt s b>ect to the extent s ch compensation is in accordance with +ection ,6*(b) of Ind stria! Jisp tes Act or /s. 6"=="===" whiche%er is !ess. ,=. Fayment nder 0hopa! 3as Hea' Jisaster . Any compensation on acco nt of a disaster recei%edKrecei%ab!e *rom :entra!K+tate 3o%ernment or !oca! a thority" by an indi%id a! or his !e&a! heir. ,1. Fayment on Do! ntary /etirement . payment" s b>ect to a maxim m of /s. 6 !a'hs" recei%ed or recei%ab!e by an emp!oyee of F b!ic +ector :ompany or any other company or +tate or Fro%incia! Act" or a !oca! a thority" or a co#operati%e society or a 2ni%ersity or a notified instit te of mana&ement" on %o! ntary retirement or termination of ser%ice is exempted. ,,. Tax paid by an emp!oyer on any income by way of per1 isites" on beha!f of an emp!oyee. ,3. FaymentK0on s nder a Hife Ins rance Fo!icy . Any s m recei%ed nder a !ife ins rance po!icy" inc! din& any bon s b t exc! din& s ms recei%ed nder # 1. a po!icy referred to in +ection 4=JJ

,. a 8eyman Ins rance Fo!icy on the !ife of any former or present emp!oyee or any person connected with b siness 3. an ins rance po!icy iss ed on or after 1.4.,==3" in respect of which the premi m payab!e for a year exceeds ,=E of the s m ass red" except in case of amo nt recei%ed on the death of a person ,4. Fayment from pro%ident f nd . Any payment (inc! din& interest from a pro%ident f nd) nder Fro%ident * nd Act" 19,6 or F b!ic Fro%ident * nd +cheme" 1964 or s ch other f nds set p by 3o%ernment of India. ,6. Acc m !ated ba!ance of /eco&ni5ed Fro%ident * nd . any acc m !ated ba!ance d e or payab!e to an emp!oyee from a reco&ni5ed pro%ident f nd is exempted" if any of the fo!!owin& conditions are satisfied# 1. if the emp!oyee has rendered a contin o s ser%ice of more than fi%e years( ,. if his ser%ice" tho &h not contin o s" has been terminated d e to his i!!#hea!th or by the contraction or discontin ation of his emp!oyer's b siness or any other ca se beyond his contro!( 3. if on cessation of his emp!oyment" his acc m !ated ba!ance is transferred to reco&ni5ed pro%ident f nd. ,6. Fayment from s perann ation f nd . Any payment from an appro%ed s perann ation f nd made on the death of a beneficiary( to an emp!oyee in !ie of K in comm tation of an ann ity on his retirement at or after a specified a&e( ref nd of contrib tions on the death of a beneficiary( or ref nd of contrib tions to an emp!oyee on his !ea%in& the ser%ice otherwise than by retirement at or after a specified a&e" to the extent of contrib tions made prior to 1.4.196, and any interest thereon. ,-. <o se /ent A!!owance (</A) . A specia! a!!owance to an assessee by his emp!oyer to meet expendit re inc rred on payment of rent for accommodation. The exemption is not a%ai!ab!e" in case the residentia! accommodation occ pied by the assessee" is owned by him or the assessee has not act a!!y inc rred expendit re on payment of rent in respect of the accommodation occ pied by him. 3=. Interest on :apita! In%estment 0onds notified p to 31.6.,==, ha%in& simp!e interest P -E p.a. payab!e ann a!!y" on in%estment he!d by indi%id a! or <2*. 31. /e!ief 0onds . ;otified /e!ief 0onds carryin& interest of 6.6E p.a. w.e.f. 1.3.,==3 (4E for bonds iss ed d rin& 1.3.,==, to ,4.,.,==3" 4.6E d rin& 16.3.,==1 to ,4.,.,==," 9E d rin& 1.1.1999 to 14.3.,==1 and 1=E p to 31.1,.1994) in case of an indi%id a! or an <.2.*. 3,. Interest on ;/I 0onds . Interest on ;/I 0onds notified p to 31.6.,==, of +tate 0an' of India and ;/I 0onds +econd +eries iss ed by +tate 0an' of India" arisin& to non#resident Indian or his nominee or s r%i%or or the person to whom s ch bonds ha%e been &ifted by a non#resident" pro%ided the bonds are p rchased in forei&n exchan&e and the principa! and interest thereon" are not a!!owab!e to be ta'en o t of India.

33. Interest payab!e to any forei&n ban' . Interest by any sched !ed ban' sha!! be exempt" pro%ided s ch deposits are made with the appro%a! of /eser%e 0an' of India. 34. Interest payab!e to the ;ordic In%estment 0an' on a !oan ad%anced by it to a pro>ect appro%ed by the :entra! 3o%ernment. 36. Interest payab!e to the $ ropean In%estment 0an' on a !oan &ranted by it in p rs ance of the framewor'#a&reement for financia! coQoperation with the :entra! 3o%ernment. 36. Interest on moneys borrowed before 1.6.,==1 by I*:I" IJ0I" $xim 0an'" ;ationa! <o sin& 0an'" +IJ0I or I:I:I from so rces o tside India is exempt to the extent it does not exceed the amo nt of interest at the rate appro%ed by the :entra! 3o%ernment. 3-. Interest Fayab!e by an Ind stria! 2nderta'in& in India on a forei&n c rrency !oan borrowed before 1.6.,==1 from so rces o tside India and appro%ed by the :entra! 3o%ernment. 34. Interest Fayab!e by +ched !ed 0an's to ;/I or a not ordinari!y resident indi%id a!K<2* on forei&n c rrency deposits appro%ed by the /0I. 39. Interest Fayab!e on forei&n c rrency !oans nder an a&reement appro%ed by the :entra! 3o%ernment before 1.6.,==3 by a F b!ic :ompany pro%idin& !on&#term ho sin& finance for constr ction or p rchase of residentia! ho ses in India. 4=. Interest Fayab!e on specified F b!ic +ector :ompanies' 0onds. 41. Interest on /etirement 0enefits . an emp!oyee of the :entra! or +tate 3o%ernment" or a F b!ic +ector :ompany depositin& interest nder Jeposit +cheme for /etirin& 3o%ernment $mp!oyees" 1949" and Jeposit +cheme for /etirin& $mp!oyees of F b!ic +ector :ompanies" 1991. 4,. Interest on 3o!d Jeposit 0onds" 1999 43. Interest on notified bonds iss ed by a !oca! a thority 44. Interest recei%ed by a non#resident or a not ordinari!y resident in India" on a deposit made on or after 1.4.,==6 in an Rffshore 0an'in& 2nit. 46. Fayment made by Indian :ompany . any payment by an Indian company en&a&ed in the b siness of operation of aircraft to ac1 ire an aircraft or an aircraft en&ine on !ease from the 3o%ernment of a forei&n +tate or a forei&n enterprise nder an a&reement entered before 1 4.199- or after 31.3.1999 b t before 1.4.,==- and appro%ed by the :entra! 3o%ernment. 46. +cho!arships &i%en to meet cost of ed cation.

4-. Any a!!owance recei%ed by the )FCs and )HACs nder the )embers of Far!iament (:onstit ency A!!owance) / !es" 1946. 44. Amo nt recei%ed by way of Award (in cash or 'ind) instit ted in the p b!ic interest by :entra!K+tate 3o%ernment or appro%ed by the :entra! 3o%ernment or as rewards by the :entra!K+tate 3o%ernment for appro%ed p rposes. 49. FensionK*ami!y Fension recei%ed by a :entra! or +tate 3o%ernment emp!oyee who has been awarded Faram Dir :ha'raK)aha Dir :ha'raKDir :ha'raKother notified, &a!!antry award" or by his fami!y. 6=. *ami!y Fension recei%ed by a widowKchi!drenKnominated heirs" of a member of the armed forces (inc! din& para#mi!itary forces)" who died in the co rse of operationa! d ties" in prescribed circ mstances and s b>ect to prescribed conditions. 61. Ann a! %a! e of a pa!ace in the occ pation of an ex#r !er. 6,. Income of !oca! a thority i.e. a Fanchayat" ) nicipa!ity" ) nicipa! :ommittee" Jistrict 0oard or :antonment 0oard. 63. Income of appro%ed scientific and research association who!!y and exc! si%e!y to its ob>ects" inc! din& profits and &ains of a b siness carried on by the instit tion which is incidenta! to its ob>ects. 64. Income of a ;ews A&ency set p in India" inc! des income or acc m !ates so!e!y for co!!ection and distrib tion of news and does not distrib te its income in any manner to its members.