Top 9 Income Types in India That Are Exempt from Tax

by priyanka roshan | july 11, 2024

agricultural income

Income earned from agricultural activities is exempt from income tax under Section 10(1) of the Income Tax Act.

interest on savings accounts

Interest earned up to ₹10,000 annually from savings accounts is tax-exempt under Section 80TTA.

long-term capital gains on equity

Gains from equity investments held for over one year, subject to Securities Transaction Tax (STT), are exempt under Section 10(38).

dividend income

Dividends received from domestic companies are tax-free for the recipient under Section 10(34).

scholarships & awards

Grants provided for educational purposes are tax-exempt under Section 10(16).

gratuity

Gratuity received by employees as per the Payment of Gratuity Act is partially exempt based on service tenure.

leave encashment

Leave encashment received by government employees at retirement is exempt under specified conditions.

life insurance proceeds

Maturity benefits and death proceeds from life insurance policies are tax-free under Section 10(10D).

gifts & inheritances

Gifts received from specified relatives or on occasions like marriage are tax-exempt under Section 56(2).