Income Tax :- Incomes not included in Total Income u/s 10

Tuesday, October 29, 2013 | comments

INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME
Incomes not included in total income.
10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
(1)  agricultural income ;
2(23[subject to the provisions of sub-section (2) of section 64,] any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family ;
4[(2A)  in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm.
Explanation.—For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits ;]
(3)  5[***]
6[(4)  (i) in the case of a non-resident, any income by way of interest on such securities or bonds as the Central Government may, by notification in the Official Gazette7, specify in this behalf, including income by way of premium on the redemption of such bonds :
8[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such securities or bonds on or after the 1st day of June, 2002;]
9[10(ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with 10a[the Foreign Exchange Management Act, 1999 (42 of 1999)], and the rules made thereunder :
Provided that such individual is a person resident outside India as defined in clause (q) of section 211 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account ;]]
12[***]
13[(4B) in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued 14[before the 1st day of June, 2002] by the Central Government as that Government may, by notification in the Official Gazette15, specify in this behalf :
Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of 15a[the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder.
Explanation.—For the purposes of this clause,—
(a)  a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India ;
(b)  "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of 15a[the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder ;]
16[(5)  in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—
(a)  from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;
(b)  from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,
subject to such conditions as may be prescribed17 (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :
Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.
Explanation.—For the purposes of this clause, "family", in relation to an individual, means—
(i)  the spouse and children of the individual ; and
(ii)  the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual; ]
(5A)  18[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(5B)  19[Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]
 (6)  in the case of an individual who is not a citizen of India,—
(i)  20[***]
21[(ii)  the remuneration received by him as an official, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of these officials, for service in such capacity :
Provided that the remuneration received by him as a trade commissioner or other official representative in India of the Government of a foreign State (not holding office as such in an honorary capacity), or as a member of the staff of any of those officials, shall be exempt only if the remuneration of the corresponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country :
Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff ;]
(iii)  to (v) [Sub-clause (ii) substituted for sub-clauses (ii) to (v) by the Finance Act, 1988, w.e.f. 1-4-1989;]
(vi)  the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled—
(a)  the foreign enterprise is not engaged in any trade or business in India ;
(b)  his stay in India does not exceed in the aggregate a period of ninety days in such previous year ; and
(c)  such remuneration is not liable to be deducted from the income of the employer chargeable under this Act ;
(via)  22[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
 (vii)  23[Omitted by the Finance Act, 1993, w.e.f. 1-4-1993;]
(viia)  24[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(viii)  any income chargeable under the head "Salaries" received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year ;
(ix)  25[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(x)  26[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
27[(xi)  the remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—
(i)  the Government ; or
(ii)  any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments ; or
(iii)  any company which is a subsidiary of a company referred to in item (ii) ; or
(iv)  any corporation established by or under a Central, State or Provincial Act ; or
(v)  any society registered under the Societies Registration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Central Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments ;]
28[(6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 29[but before the 1st day of June, 2002] 30[and,—
(a)  where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy ; and
(b)  in any other case, the agreement is approved by the Central Government,
the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid].
Explanation.—For the purposes of this clause 31[and clause (6B)],—
(a)  "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;
(b)  "foreign company" shall have the same meaning as in section 80B ;
(c)  "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;]
31[(6B) where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into 32[before the 1st day of June, 2002] by the Central Government with the Government of a foreign State or an international organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved 32[before that date] by the Central Government, the tax so paid ;]
33[(6BB) where in the case of the Government of a foreign State or a foreign enterprise deriving income from an Indian company engaged in the business of operation of aircraft, as a consideration of acquiring an aircraft or an aircraft engine (other than payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease under 34[an agreement entered into after the 31st day of March, 1997 but before the 1st day of April, 1999, or entered into after the 35[31st day of March, 36[2007]] and approved by the Central Government in this behalf] and the tax on such income is payable by such Indian company under the terms of that agreement to the Central Government, the tax so paid.
Explanation.—For the purposes of this clause, the expression "foreign enterprise" means a person who is a non-resident;]
37[(6C)  any income arising to such foreign company, as the Central Government may, by notification38 in the Official Gazette, specify in this behalf, by way of39[royalty or]fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India ;]
(7)  any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India ;
(8)  in the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)—
(a)  the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and
(b)  any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State ;
40[(8A)  in the case of a consultant—
(a)  any remuneration or fee received by him or it, directly or indirectly, out of the funds made available to an international organisation [hereafter referred to in this clause and clause (8B) as the agency] under a technical assistance grant agreement between the agency and the Government of a foreign State ; and
(b)  any other income which accrues or arises to him or it outside India, and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay any income or social security tax to the Government of the country of his or its origin.
Explanation.—In this clause, "consultant" means—
(i)  any individual, who is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; or
(ii)  any other person, being a non-resident,
engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project, provided the following conditions are fulfilled, namely :—
(1)  the technical assistance is in accordance with an agreement entered into by the Central Government and the agency ; and
(2)  the agreement relating to the engagement of the consultant is approved by the prescribed authority41 for the purposes of this clause ;
(8B)  in the case of an individual who is assigned to duties in India in connection with any technical assistance programme and project in accordance with an agreement entered into by the Central Government and the agency—
(a)  the remuneration received by him, directly or indirectly, for such duties from any consultant referred to in clause (8A) ; and
(b)  any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the country of his origin, provided the following conditions are fulfilled, namely :—
(i)  the individual is an employee of the consultant referred to in clause (8A) and is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; and
(ii)  the contract of service of such individual is approved by the prescribed authority42 before the commencement of his service ;]
(9)  the income of any member of the family of any such individual as is referred to in clause (843[or clause (8A) or, as the case may be, clause (8B)] accompanying him to India, which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State 43a[or, as the case may be, country of origin of such member];
44[45(10)  46(i) any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services ;
(ii)  any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 447 of that Act ;
(iii)  any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service4849[calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit50 as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government] :
Provided that where any gratuities referred to in this clause51 are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause 52[shall not exceed the limit so specified] :
Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause 52[shall not exceed the limit so specified] as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.
53[* * *]
Explanation.54[In this clause, and in clause (10AA)], "salary" shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule ;]
55[56(10A57(i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable 58[to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act ;
(ii) any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed—
(a)  in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and
(b)  in any other case, the commuted value of one-half of such pension,
such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality ;
59[* * *]
60[ (iii) any payment in commutation of pension received from a fund under clause (23AAB) ;]
61[62(10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his 63retirement 64[whether] on superannuation or otherwise ;
(ii) any payment of the nature referred to in sub-clause (i) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement 64[whether] on superannuation 63or otherwise as does not exceed 65[ten] months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement 64[whether] on superannuation or otherwise, 66[subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit67 applicable in this behalf to the employees of that Government] :
Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause 68[shall not exceed the limit so specified] :
Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause 69[shall not exceed the limit so specified], as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.
70[* * *]
Explanation.—For the purposes of sub-clause (ii),—
71[* * *] the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired ;
72[* * *]
73[(10B)  any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, 74[at the time of his retrenchment :
Provided that the amount exempt under this clause shall not exceed—
 (i)  an amount calculated in accordance with the provisions of 75clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947) ; or
76[(ii)  such amount, not being less than fifty thousand rupees, as the Central Government may, by notification77 in the Official Gazette, specify in this behalf,]
whichever is less :
Provided further that the preceding proviso shall not apply in respect of any compensation received by a workman in accordance with any scheme which the Central Government may, having regard to the need for extending special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in this behalf.]
Explanation.—For the purposes of this clause—
(a)  compensation received by a workman at the time of the closing down of the undertaking in which he is employed shall be deemed to be compensation received at the time of his retrenchment ;
(b)  compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is employed from the employer in relation to that undertaking to a new employer, shall be deemed to be compensation received at the time of his retrenchment if—
(i)  the service of the workman has been interrupted by such transfer ; or
(ii)  the terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before the transfer ; or
(iii)  the new employer is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer ;
78(c) the expressions "employer" and "workman" shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947);]
79[(10BB) any payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (21 of 1985), and any scheme framed thereunder except payment made to any assessee in connection with the Bhopal Gas Leak Disaster to the extent such assessee has been allowed a deduction under this Act on account of any loss or damage caused to him by such disaster ;]
80[(10BC) any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under this Act on account of any loss or damage caused by such disaster.
Explanation.—For the purposes of this clause, the expression "disaster" shall have the meaning assigned to it under clause (d) of section 281 of the Disaster Management Act, 2005 (53 of 2005);]
82[(10C83any amount received84 85[or receivable]by an employee of—
(i)  a public sector company ; or
(ii)  any other company ; or
(iii)  an authority established under a Central, State or Provincial Act ; or
(iv)  a local 86[authority ; or]
87[(v) a co-operative society ; or
(vi)  a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956) ; or
(vii)  an Indian Institute of Technology within the meaning of clause (g) of section 388 of the Institutes of Technology Act, 1961 (59 of 1961) ; or
89[(viia)  any State Government; or]
90[(viib)  the Central Government; or]
91[(viic)  an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette92, specify in this behalf; or]
(viii)  such institute of management as the Central Government may, by notification93 in the Official Gazette, specify in this behalf,]
94[on his] 95[voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i), a scheme of voluntary separation, to the extent such amount does not exceed five lakh rupees] :
Provided that the schemes of the said companies or authorities 96[or societies or Universities or the Institutes referred to in sub-clauses (vii) and (viii)], as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of economic viability) as may be 97prescribed 98[***]:
Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year :]
99[Provided also that where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under this clause shall be allowed to him in relation to such, or any other, assessment year;]
99a[(10CC) in the case of an employee, being an individual deriving income in the nature of a perquisite, not provided for by way of monetary payment, within the meaning of clause (2) of section 17, the tax on such income actually paid by his employer, at the option of the employer, on behalf of such employee, notwithstanding anything contained in section 20099b of the Companies Act, 1956 (1 of 1956);]
99c[(10D)  any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than—
(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA *; or
(b)  any sum received under a Keyman insurance policy; or
(c)  any sum received under an insurance policy issued on or after the 1st day of April, 2003 99d[but on or before the 31st day of March, 2012] in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured99d[; or]
99d[(d any sum received under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten per cent of the actual capital sum assured:]
Provided that the provisions of 1[sub-clauses (c) and (d)] shall not apply to any sum received on the death of a person:
Provided further that for the purpose of calculating the actual capital sum assured under 2[sub-clause (c)], effect shall be given to the3[Explanation to sub-section (3) of section 80C or the Explanation to sub-section (2A) of section 88, as the case may be].
The following third proviso shall be inserted after the second proviso to sub-clause (d) of clause (10D) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :
Provided also that where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person, who is—
(i) a person with disability or a person with severe disability as referred to in section 80U; or
(ii) suffering from disease or ailment as specified in the rules made under section 80DDB,
the provisions of this sub-clause shall have effect as if for the words "ten per cent", the words "fifteen per cent" had been substituted.
4[Explanation 1].For the purposes of this clause, "Keyman insurance policy" means a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person 4a[and includes such policy which has been assigned to a person, at any time during the term of the policy, with or without any consideration];]
5[Explanation 2.—For the purposes of sub-clause (d)the expression "actual capital sum assured" shall have the meaning assigned to it in the Explanation to sub-section (3A) of section 80C;]
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