Income Tax Benefits Available to Individuals and HUF - Part 2

S.N.

Section

Particulars

Limit of exemption

Available to

24

10(11)

Payment from Public Provident Fund or Statutory Provident Fund

Exempt Subject to certain conditions

Individual and HUF

24A.

10(11A)

Any payment from an account, opened in accordance with the Sukanya Samriddhi Account Rules, 2014

Entire amount (including interest accrued on the deposit made in such account) shall be exempt from tax

Individual (who deposited the amount in accordance with Sukanya Samriddhi Account Rules, 2014)

25

10(12)

Accumulated balance payable to employees participating in recognized PF (subject to certain conditions).

To the extent provided in Rule 8 of Part A of the Fourth Schedule of the Income-Tax Act.

Individual - Salaried Employee

25A

10(12A)

Sum received from the National Pension System Trust by an assessee on account of closure or opting out of the pension scheme referred to in section 80CCD.

Exempt up to 60% of amount due at the time of closure or opting out of the scheme.

Assessee

25B

10(12B)

Partial withdrawal from National Pension System Trust (section 80CCD)

Exempt up to 25% of amount of contributions made by the employee

Employee

26

10(13)

Payment from Approved Superannuation Fund on death or retirement of employee, etc. (Subject to certain conditions)

W.e.f assessment year 2017-18, any amount transferred from superannuation fund to the notified pension scheme referred to in Section 80CCD shall also be exempt from tax.

Exempt subject to certain limits

Individual - Salaried Employee

27

10(13A)

House Rent Allowance

Least of the following is exempt from tax:

(i) 50% of salary* for metro cities** and 40% of salary for other cities

(ii) Actual HRA received

(iii) Excess of rent paid over 10% of salary*

* Salary = Aggregate of basic salary, DA (to the extent it forms part of retirement benefits) and turnover based commission

** Delhi, Mumbai, Kolkata, Chennai

Individual - Salaried Employee

28

10(14)

Prescribed allowances for performance of official duties.

To the extent allowance actually incurred for the performance of official duties.

Individual - Salaried Employee

29

10(15)(iib)

Interest on Notified Capital Investment Bonds notified prior to 01-06-2002.

Interest Amount

Individual and HUF

10(15)(iic)

Interest on notified Relief Bonds.

Interest Amount

Individual and HUF

10(15)(iid)

Interest on notified bonds (notified prior to 01-06-2002) purchased in foreign exchange (subject to certain conditions)

Interest Amount

Individual, being a:

a) NRI or nominee or survivor of NRI;

b) Individual to whom bonds have been gifted by NRI.

10(15)(iv)(fa)

Interest payable by scheduled bank on deposits in foreign currency where acceptance of such deposits by the bank is duly approved by RBI.

Interest Amount

a) Non-resident

b) Individual or HUF being a resident but not ordinary resident

10(15)(iv)(i)

Interest received from the Government on deposits in notified schemes out of money due on account of retirement.

Interest Amount

Individual, being an employee of Central and State Government or Public Sector Company.

10(15)(viii)

Interest on deposits made on or after 01.04.2005 is an offshore banking unit referred to in Section 2(u) of the Special Economic Zones Act, 2005.

Interest Amount

Person who is a non-resident or not ordinarily resident.

30

10(16)

Scholarships granted to meet the cost of education.

Entire Amount

Individual

31

10(17)(i)

Daily Allowances received by members of Parliament.

Entire Amount

Individual - Member of Parliament or State Legislature or any Committee thereof.

10(17)(ii)

Any Allowance received by MP under Member of Parliament (Constituency Allowance) Rules, 1986.

Entire Amount

Individual - Member of Parliament

10(17)(iii)

Any Constituency Allowance received.

Entire Amount

Individual - Member of State Legislature

32

10(18)

Pension received by an individual who has won specified/notified gallantry awards and family pension received by any family member of such individual

Entire Amount

Individual - Central or State Government Employees or his family member

33

10(19)

Family pension received by the widow, children or nominated heirs of a member of the armed forces (including paramilitary forces) where death of such member has occurred in the course of operational duties (subject to prescribed conditions and circumstances)

Entire Amount

Individual - Widow or children or nominated heirs of members of the armed forces.

34

10(19A)

Notional annual value of any one palace occupied by a former Ruler.

Entire amount

Individual

34A

10(23FBB)

Any income received by a unit holder from an investment fund [being of the same nature as income chargeable under the head PGBP]

That proportion of distributed income which is of the same nature as income chargeable under the head PGBP.

Unit holder of an investment fund specified under Section 115UB

34B

10(23FD)

Any income received by a unit holder from business trust, not being that proportion of the income of business trust which is in the nature of:

a) interest received or receivable from a SPV; or

b) any income from renting or leasing or letting out any real estate asset owned directly by such business trust (REIT)

Any income (except interest received from a SPV or any rental income) distributed by business trust to its unit holders

Unit holder of a business trust.

35

10(26)

Specified income of a member of Specified Scheduled Tribes residing in Specified Areas.

Entire Amount

Individual being a member of Scheduled Tribe

36

10(26AAA)

Income from any source in the State of Sikkim or income by way of dividend or interest on securities (Subject to certain conditions).

Entire Amount

Individual, being a Sikkimese (other than Sikkimese Woman who, after 31-03-2008, marries non-Sikkimese)

37

10(32)

Income of minor child clubbed under Section 64(1A) with parent's income.

Rs. 1,500 per child or Income of Minor, whichever is lower

Individual

38

10(37)

Capital gains arising on compulsory acquisition of urban agriculture land, if:

a) Compensation is received after 31-03-2004; and

b) Agriculture land was used by taxpayer or his parents for agricultural purpose during last two years

(Subject to certain conditions)

Entire Amount of capital gains

Individual and HUF

38A

10(37A)

Capital Gains arising on transfer of land under Land Pooling Scheme under the Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules, 2015.

Entire amount of capital gains

Individual and HUF

39

10(43)

Amount received by an Individual as a loan under reverse mortgage scheme referred to in Section 47(xvi)

Entire Amount

Individual

S. N.

Section

Particulars

Limit of exemption

Available to

I. Deduction from Salaries

1

16(ia)

Standard Deduction

Rs. 50,000 or the amount of the salary whichever is fess

Individual - Salaried Employee & Pensioners

2

16 (ii)

Entertainment Allowance

Least of the following is exempt from tax:

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisite)

c) Actual entertainment allowance received

Individual - Government Employee & Pensioners

3

16 (iii)

Employment Tax/ Professional Tax.

Amount actually paid during the year

Individual - Salaried Employee

4

-

Lump-sum payment made gratuitously or by way of compensation or otherwise to widow or other legal heirs of an employee who dies while still in active service [Circular No. 573, dated 21-08-1990]

Enter amount paid in lump-sum

Individual - Widow or other legal heirs of employee.

5

-

Ex-gratia payment to a person (or legal heirs) by Central or State Government, Local Authority or Public Sector Undertaking consequent upon injury to the person or death of family member while on duty [Circular No. 776, dated 08-06-1999]

Enter amount paid as ex-gratia

Individual or legal heirs.

6

89

Any portion of salary received in arrears or in advance or profit received in lieu of salary [Subject to certain conditions and circumstances]

Relief to the extent computed in accordance with Section 89

Individual - Salaried Employee

7

Allowances (Subject to certain conditions and circumstances)

Various allowances allowed to an employee are exempt from tax up to a certain limit.

(They have been discussed in the first part of this article as well as in my previous article)

Individual - Salaried Employee

II. Income from Business and Profession

1

44AD

Computation of income from eligible business on presumptive basis under Section 44AD provided turnover of eligible business does not exceed Rs. 2 crore (Subject to certain conditions).

Note: If an assessee opts out of the presumptive taxation scheme, after a specified period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter. [Section 44AD(4)]

Presumptive income of eligible business shall be 8 % of gross receipt or total turnover.

Note: Presumptive income shall be calculated at rate of 6% in respect of total turnover or gross receipts which is received by an account payee cheque or draft or use of electronic clearing system or any other electronic mode as may be notified.

Resident Individual, Resident HUF or Resident Partnership Firm (Other than LLP)

2

44ADA

Computation of income from specified profession on presumptive basis if the total gross receipts from such profession do not exceed fifty lakh rupees in a previous year.

(Subject to conditions)

Presumptive income of such profession shall be 50% of total gross receipt.

Resident Assessee being individual or partnership firm (other than LLP)

III. Deductions from Capital Gains

1

54

Investment of long-term capital gains, arising from sale of residential house or land appurtenant thereto, in purchase/ construction of one/ two new residential house (Subject to certain conditions and limits).

Note:

With effect from Assessment Year 2020-21, a taxpayer has an option to make investment in two residential house properties in India. This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs. 2 crores.

Amount invested new house/ houses or capital gain, whichever is lower.

Individual and HUF

2

54B

Investment of capital gains, arising from transfer of land used for agricultural purposes by an individual or his parents or a HUF, in other agricultural land (Subject to certain conditions and limits).

Amount invested in agricultural land or capital gains, whichever is lower.

Individual and HUF

3

54F

Investment of long-term capital gains, arising from transfer of any long term asset other than a residential house property, in one new residential house property, provided that on the date of transfer the assessee should not own more than one residential house property (Subject to certain conditions and limits).

Amount invested in one new asset X capital gains/Net Consideration

Individual and HUF

4

54GB

Investment of long-term capital gains arising from transfer of long-term capital asset, being a residential property, for subscribing the equity shares of an eligible company and such company has, within one year from the date of subscription, utilized this amount for purchase of specified new asset (subject to certain conditions and limits).

Note:

1. W.e.f. April 1, 2017, eligible start-up is also included in the definition of eligible company.

2. Provisions of this section shall not apply to any transfer of residential property made after March 31, 2017. However, in case of an investment in an eligible start-up, the residential property can be transferred up to March 31, 2021.

Amount invested in new assets by eligible Co. X Capital gains/Net Consideration

Individual and HUF

IV. Deductions from Income from Other Sources

1

56(2)(x)

Any sum of money or immovable property or movable property received on or after April 1, 2017 without consideration or for inadequate consideration*** from a relative or member of HUF (subject to certain conditions and circumstances).

Note : In case of immovable property, 'inadequate consideration' shall mean difference between stamp duty value and actual consideration, if it exceeds Rs. 50,000 or amount equal to 10% of consideration, whichever is higher.

The whole amount received from specified relatives or in specified circumstances shall not be included in taxable income.

Any person