While income tax return (ITR) filing, the taxpayer is advised to use income tax calculator properly as there are some sources of income.
New Delhi: As per income tax rules any individual having an annual income of more than Rs 2.50 lakh is required to file income tax return. It is necessary irrespective of the source of income. While salary income and business income are taxed as per the applicable individual tax slabs, there are certain sources of income that are exempt from income tax irrespective of the amount. Maturity proceeds of Public Provident Fund (PPF), Employees Provident Fund (EPF), insurance policy are exempt from income tax.
Similarly, there are certain other sources of income that are not taxable. Tax experts say income from gift including marriage gift, share of profit in a partnership firm, educational scholarships, gratuity and ancestral property is also exempt from income tax.
1] Share of profit in partnership firm: The share of profit, received by a partner, in the total income of the firm is exempt from income tax in the hands of the partners. As share of partners is arrived after providing for all expenses and income tax, partnership is not taxable. However, remuneration received by a partner and interest on capital received by the partner is taxable.
2] Marriage gift: Gifts received by a newly-wed couple during their wedding are exempt from tax. If the gifts are given by immediate family members, such as their parents, siblings or any of their siblings’ spouses, or the siblings of their parents, they are exempt regardless of the value of the gift. Whether it is cash, stocks, jewellery, automobiles, electronics, artefacts, etc., or even immovable presents such as house or land, shall not attract tax and are exempt under Section 56 of the Income Tax Act, 1961.
However, if gifts are not marriage gifts, then they will be taxable if the combined value of the gifts exceeds Rs 50,000.
3] Educational scholarship: Any scholarship granted to meet the cost of education is exempt from income tax as per Section 10(16) of Income Tax Act 1961. However, to claim the expenses the scholarship income should have been used to meet the education expenses only.
4] Ancestral property: The tax applicable while inheriting an asset is called Inheritance Tax or Estate Tax. In India, Inheritance Tax is not levied and (also referred to as Estate Tax) is a tax which is levied at the time of inheriting any asset. Inheritance Tax is not levied in India. So any amount received under a Will or by way of inheritance or in contemplation of death of the payer is exempted from income tax under Section 56 (ii).
5] Agricultural Income: In India, agricultural income is exempted from taxation and not included under total income. Agricultural income refers to income earned from sources that include farming land, buildings on or identified with agricultural land and commercial produce from horticultural land.