A Luk At Incomes ThaT aRe Not Taxed.....

Any monies that you receive from your company for the purpose of
travel to any place in India along with your family for the purpose of
leave. The claim can be made two times in a bucket of 4 years. Family
includes Wife and children and also parents, brothers or sisters if
they are dependent on you. The only check being that you have to
maintain original bills to prove travel if the IT department asks for
it.

Although the tax man has been vested with the task of collecting taxes
on the incomes of the citizens, he has deemed certain kinds of incomes
as “not included in total income”. Thus if any earning that you
receive which falls under these incomes you don’t have to treat it as
income or pay tax on it! Let’s take a look at the different incomes
that are not incomes!

Agricultural Income: Any income which you receive as income from any
agricultural activity is deemed as not included in total income. If
your father is into agriculture and he gives you a part of the income
as a gift, then you don’t need to pay tax on it, provided, your father
files his tax returns.

Income for being partner in a firm: If you receive any income for
being a partner of a firm which has already been assessed separately
then the income need not be included in total income. Thus any share
in the profits that you have in a firm according to the partnership
deed is not taxable.

5000 Rupees: An amount of Upto Rs. 5000 which you receive for any
reason other than as prize money and are not a recurring amount can be
excluded from your total income. It seems to be a very small amount
but sometimes this could be the difference between being in a higher
slab or a lower slab.

Travel concession/assistance: Any monies that you receive from your
company for the purpose of travel to any place in India along with
your family for the purpose of leave. The claim can be made two times
in a bucket of 4 years. Family includes Wife and children and also
parents, brothers or sisters if they are dependent on you. The only
check being that you have to maintain original bills to prove travel
if the IT department asks for it.

Retirement/Death gratuity: Any payment received under a pension or
death cum retirement gratuity scheme by an individual or his widow,
children or dependents. The gratuity should not be more than the
number of years in service multiplied by half months salary based on a
ten month average. For example if the average salary for the previous
ten months prior to receiving gratuity is 10000 and years in service
is 15, then 15×5000=75000/- would be not included in total income.

Leave Salary: Any cash amount received as compensation for earned
leave which is en-cashed at the time of retirement. (This applies only
to employees of Central/State government). For employees other than
government employees, the Leave salary can be en-cashed up to a limit
of ten months worth of earned leave. It also specifies that the
entitlement to earned leave should not exceed 30 days for each year of
service. For example if you have 76 days of earned leave and total
years of service is 2 years, then, only the cash equivalent of 60 days
of earned leave is not added to income.

Retrenchment: Any compensation received by a workman due to the
closure of his company or change in the management of the company if
new terms are less favorable than what was previously applicable.

Voluntary retirement: Any amount up to a maximum of Rs 5 lakh paid at
the time of voluntary retirement in accordance with and scheme of
voluntary retirement of the company. But, the company paying the VRS
should have a framework for VRS as prescribed by the government.

Life Insurance Policy: Any amount received as benefit from a life
insurance policy including bonus payment is not included in total
income. The only exception is the amounts paid as part of Key-man
policies.

Provident Fund: All payment which is received from a provident fund to
which the PF act applies or any PF fund of the Government is not
included in total income.

Superannuation: Any payment made from a superannuation fund on the
death of the beneficiary or as a refund of contributions or if the
employee becomes incapacitated before retirement.

Payment of Rent: any allowance paid by an employer to an employee to
meet expenditure actually incurred on the payment of rent for
accommodation. But this is not allowed if the house is owned by the
employee or he has not incurred the rental.

Income from Government securities: Any earnings from interest, premium
on redemption or other payment on securities, bonds, annuity
certificates, savings certificates and other instruments issued by the
central government and also deposits taken by the central government.

In case of non-residents if the bond have come to us by virtue of
being a nominee or survivor on the non-resident or if they have been
gifted to us by a non-resident Indian who have purchased the
instrument in foreign exchange and the principal and interest will not
be taken out of India by the recipient of the gift, the amounts will
not be added to income.

Scholarships for Education are not included in total Income.

Awards and Rewards: All payments receive in cash or kind as an award
given by the Central or State Government or by a body recognized by
the central government to give such awards will not be included in the
total income.

Relief funds: Any amounts which are received by an individual as part
of the Prime minister’s national relief fund or the promotion of folk
art fund or students fund or foundation for communal harmony will be
treated as not included in income.

Thus we see that although the tax man is mostly portrayed as a villain
in many media, he has been liberal enough to give us the benefit of
income tax free income from so many sources.

The above learnings can be applied to our personal lives in two ways.
1. Try to increase the income if any coming under any of the above
heads. 2. Invest in any of the tax free avenues given above so that we
may get the benefit of the investment as well as tax free income when
it comes to our hands later on.