5 Income Tax Exempted Sources of Income beyond PPF & EPF
Individuals with an annual income of more than Rs 2.50 lakh are required to file an income tax return under income tax guidelines. It is required regardless of the source of income. While wage and corporate income are taxed according to the applicable individual tax slabs, there are several forms of income that are tax-free regardless of the quantity. Public Provident Fund (PPF), Employees Provident Fund (EPF), and insurance policy maturity proceeds are tax-free. Similarly, there are other types of income that are not taxable. Income from gifts, such as a wedding gift, a share of profit in a partnership firm, educational scholarships, gratuity, and ancestral property, is also tax-free, according to tax experts. 1. Profit share in a partnership firm: In the hands of the partners, the profit share obtained by a partner in the overall income of the firm is exempt from income tax. Because the share of partners is calculated after all expenses and income tax, the partnership is not taxable. Remuneration and interest on capital received by a partner, on the other hand, are taxed. 2. Educational scholarship: Under Section 10(16) of the Income Tax Act 1961, any scholarship given to cover the expense of study is tax-free. However, in order to claim the expenses, the scholarship money must have been spent solely for educational purposes. 3. Wedding gift: Gifts given to a newlywed couple at their wedding are tax-free. Gifts given by direct family members, such as parents, siblings, or any of their siblings' spouses, or siblings of their parents, are excluded, regardless of the value of the gift. Cash, stocks, jewelry, automobiles, gadgets, antiquities, and even immovable gifts such as a house or land are all exempt from taxation under Section 56 of the Income Tax Act, 1961. If the cumulative value of the presents exceeds Rs 50,000, they will be taxable if they are not marital gifts. 4. Agricultural Income: Agricultural income is tax-free in India and is not included in total income. Agricultural revenue is obtained from a variety of sources, including farming land, structures on or associated with agricultural land, and commercial produce produced on horticulture land. 5. Ancestral property: Inheritance Tax, often known as Estate Tax, is a tax that applies when an asset is inherited. Inheritance tax is not levied in India, while estate tax (sometimes known as inheritance tax) is a tax levied when an asset is inherited. In India, there is no inheritance tax. As a result, any money received under a Will, by inheritance, or in anticipation of the payer's death is free from income tax under Section 56. (ii).