Exempt Income
Exempt income is income that is not subject to income tax. Examples of exempt income include:
- Gifts, inheritances, and prizes
- Social Security benefits
- Certain pensions
- Interest on savings accounts
- Scholarships and fellowships
The amount of exempt income that you can earn without having to pay taxes depends on your filing status and other factors. If you are single, you can earn up to $20,500 of exempt income without having to pay taxes. If you are married, you can earn up to $27,000 of exempt income without having to pay taxes.
If you have any questions about exempt income or how it could affect your tax return, you should consult with a tax professional.
FAQs
What is exempt income?
Exempt income refers to certain types of income that are not subject to income tax. These incomes are excluded from the total taxable income and do not require the payment of income tax. Examples include agricultural income, certain allowances, and specific interest income under various sections of the Income Tax Act.
Which income is exempt from income tax?
Examples of income exempt from income tax include agricultural income, certain allowances such as house rent allowance (HRA) and leave travel allowance (LTA), interest from specific savings schemes, and some components of salary like gratuity and pension under prescribed limits.
What is Section 10 exemption in income tax?
Section 10 of the Income Tax Act specifies various types of income that are exempt from tax. These include agricultural income, allowances such as HRA, LTA, and special allowances, interest from specific savings accounts, and other incomes as outlined in different subsections of Section 10.
What is exempt income in salary?
Exempt income in salary refers to the portion of an employee’s earnings that is not subject to income tax. Examples include house rent allowance (HRA), leave travel allowance (LTA), gratuity, and certain special allowances. These are exempt up to certain limits specified under the Income Tax Act.
What are Section 10(11) and 10(12) of the Income Tax Act?
Section 10(11) and 10(12) of the Income Tax Act pertain to the exemption of income from specific retirement benefit schemes. Section 10(11) exempts income received from provident funds recognized by the government, and Section 10(12) exempts the accumulated balance due and becoming payable to an employee participating in a recognized provident fund, subject to certain conditions.
