Tax season can be stressful. However, knowing which income sources are tax-free makes a significant difference. Here's a rundown of 12 income sources exempt from tax, ensuring you file your ITR accurately and avoid unnecessary payments.
Agricultural Income
Income from agricultural activities is tax-free under Indian law. If you're a farmer or involved in agriculture, your earnings from these activities won't be taxed, allowing you to reinvest fully in your farming operations.
Gifts from Relatives
Receiving gifts? If they come from specified relatives, they're tax-exempt. This includes parents, siblings, and other close family members, offering a financial cushion without tax worries.
Scholarships for Education
Scholarships received for education are non-taxable. Students can focus on their studies and utilize these funds without worrying about the taxman taking a cut.
Interest from PPF and EPF
Interest earned from Public Provident Fund (PPF) and Employee Provident Fund (EPF) is exempt from tax. These savings instruments not only offer returns but also provide tax-free interest, enhancing your savings.
Gratuity
Gratuity received on retirement or resignation is tax-free, subject to certain conditions. This ensures that your retirement corpus remains intact, providing financial security.
Inheritance
Inherited property or money is not considered income and, hence, not taxable. Beneficiaries can receive their inheritance without tax implications, preserving the wealth passed down through generations.
Dividends from Mutual Funds
Dividends earned from mutual funds registered under Section 10(35) are exempt from tax. Investors can enjoy the returns without worrying about additional tax burdens.
Amount Received from Life Insurance
Proceeds from life insurance policies, including maturity benefits and death claims, are tax-free. This ensures financial support during critical times without any tax deductions.
Provident Fund Withdrawal
Withdrawals from a recognized provident fund after a specified period are tax-exempt. This allows employees to use their hard-earned money without tax deductions upon retirement.
Long-term Capital Gains from Shares
Long-term capital gains (LTCG) from listed shares up to ₹1 lakh per financial year are exempt from tax. Investors can benefit from their investments without hefty tax obligations.
Income from HUF
Income received by a member from a Hindu Undivided Family (HUF) is tax-free. This unique provision supports the financial unity and well-being of HUF members.
Compensation for Disaster
Compensation received for any disaster or accident is not taxable. This ensures that victims can fully utilize the compensation for recovery and rebuilding without tax concerns.
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