Every individual or Hindu undivided family (HUF) are worried about taxable income, some of you are not aware of the exempt income option ITR1 under section 10 which was only (for reporting purpose in ITR 1).
In this article, we will understand the objectives of the portion exempt income for reporting purposes.
Exempt income (for reporting purposes)
In ITR 1 when you click to “Tax paid and verification portion” You will get except income (for reporting purpose).
There are three categories available:
- Sec 10(38) (Exempted Long-term capital gain)
- Sec 10(34) (Exempted Dividend Income)
- Agriculture Income (<= Rs 5000)
What are Exemptions u/s 10(38) on Long-Term Capital Gains
Before understanding section 10(38) of income tax act, We will understand what is long-Term Capital Gains?
Long-term capital gain tax is the tax revenue generate by the Government of India against the profit generation of the investor from the long-term assets.
Any investment of more than 12 months is said to be a long-term investment.
What is Section 10(38)?
Under section 10(38), In case of long-term transactions executed on a recognized stock exchange in any International Financial Services Centre (SEZ Act) where executed is in foreign currency, the exemption u/s 10(38) is available even though it is not liable to STT.
Section 10(34) – Tax Exemption on Dividend Income
According to section 10(34), any income received in the form of a dividend from the domestic company.
When you hold a share/stock of the company, you will get the dividend declared by some of the company annually.
Dividend income to the taxpayer from a domestic company is exempt in the hands of the shareholders for a simple reason of avoiding double taxation.
Although income from share dividend is exempted, the income discloser is mandatory.
Agriculture Income (<= Rs 5000)
Under this portion, it is very clear “if the taxpayer received income <= Rs 5000, it is completely exempted, the discloser is mandatory.
There are several other types of income which are exempt u/s 10 of the Income Tax Act which is also mentioned in ITR.
The list below deals with income exempted. Some of it is also available in ITR form.
Some of the allowances received by the employee are partially taxable you are required to report the exempt portion from these allowances in this portion.
Other than that some of the other payment received which comes under exemption nature partially or fully like.
- Public Provident Fund u/s 10(12)
- Employee Provident Fund
- Amount Received on voluntary retirement or termination of services u/s 10(10C)
- Payment received from Life Insurance policy u/s 10(10D)
- Income by way of interest, premium or redemption etc u/s 10(15)
- Gratuity received u/s 10(10)
- Pension received u/s 10(10A)
- Earned Leave encashment 10(10AA)
If the income received from different sources u/s 10, you only have to press Add button and select the nature of income and insert the amount.
This part of the ITR is very important according to the Income-tax department.
Any Discloser under this section is non-taxable but hiding any other source of income invites income tax notice.
So always be an honest taxpayer and disclose all your payment and its nature.