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New Delhi: It is that time of the year again. Filing Income Tax Return (ITR) is an annual ritual by individuals and other category of taxpayers.
While the Income Tax department has laid out all the specific rules pertaining to ITR as per the Income Tax Act, there are 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.
It may be noted that the Central Board of Direct Taxes (CBDT) has already notified Income Tax Return Forms (ITR Forms) for the Assessment Year 2021-22 (FY 2020-21). There is no change in the manner of filing of ITR Forms as compared to last year.
This year, taxpayers are required to submit the returns for the 2020-21 financial year and the assessment year would be AY 2021-22.
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