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Incomes Exempt from TaxIncomes Exempt from Tax
SalariesSalaries [[Sections 10(5) toSections 10(5) to10(10A)]10(10A)]
Prepared By:Prepared By:ReenaReena AhujaAhuja (08061)(08061)
SulabhSulabh MahetaMaheta (08084)(08084)
AminAmin PattaniPattani (08100)(08100)
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Value of Leave Travel
Concession in India [Sec. 10(5)] LTC received by employees from their employers
for preceding to any place in India.
The benefit is available to individuals - citizens as
well as non citizens.
Limit of exemptions
Monetary limits
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Example:
Mr. X went on holiday on 25.12.2006 to Delhi with
his wife and three children (one son age 5 years;
twin daughters - age 2 years). They went by flight
(economy class) and the total cost of tickets
reimbursed by his employer was Rs60,000 (Rs45,000
for adults and 15,000 for the three minor children).
And
If among his three children the twins were 5 yearsold and the son 3 years old.
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Exemption in the case of
individuals, who are not citizens of
India [Section 10(6)]
(i) Section 10(6)(ii) grants exemption to a person in
respect of the remuneration received by him forservices as high commission, legation, consulate
or the trade representation of a foreign State or
as a member of the staff of any of these officials.
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Cont..Cont..
Conditions:
(a) The remuneration received by our
corresponding Government officers resident in
such foreign countries should be exempt.
(b) The above mentioned officers should be the
subjects of the respective countries and should
not be engaged in any other business orprofession or employment in India.
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(ii)(ii) SectionSection 1010((66)(vi))(vi) providesprovides thatthat remunerationremuneration
receivedreceived byby aa foreignforeign nationalnational asas anan employeeemployee ofof aa
foreignforeign enterpriseenterprise forfor serviceservice renderedrendered byby himhim duringduringhishis staystay inin IndiaIndia isis alsoalso exemptexempt fromfrom taxtax..
(1) the foreign enterprise is not engaged in a
business activity in India.
(2) The employees stay in India does not exceed
a total of 90 days in the previous year;
(3) the remuneration is not liable to be deducted
from the employers income chargeable to tax
under the Act.
Condition:
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(iii) section 10(6)(viii) provides that employee who is also
non-resident for services rendered in
connection with his employment on aforeign ship where his total stay in
India does not exceed a total of 90
days in the previous year.
(iv) Section 10(6)(xi) provides that any remunerationreceived by employees of foreign
Government from their respective
Government during their stay in India
in connection with their training in
any establishment or office of the
Government or any public sector
undertaking is exempt from tax.
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Allowances payable outside India
[Sec. 10(7)]
AllowancesAllowances oror perquisitesperquisites paidpaid oror allowedallowed asas
suchsuch outsideoutside IndiaIndia byby thethe GovernmentGovernment toto aa
citizencitizen ofof IndiaIndia forfor servicesservices renderedrendered outsideoutside
IndiaIndia areare exemptexempt fromfrom taxtax..
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Co-operative technical assistance
programmers [Section 10(8) and 10(9)]
Individuals who are assigned duties in India in connection with
any co-operative technical assistance programs and projects
would be exempt from tax on their receipts by way of:
(a) Remuneration received directly or indirectly from theGovernment of a foreign State for rendering such
services;
(b) Any other income accruing or arising outside India in
respect of which the individual is required to pay incometax or other social security tax to the Government of that
foreign State.
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Consultant remuneration
[sec. 10(8A) and (8B)]
Under clause (8A), any remuneration or fee received by a
consultant, directly or indirectly, out of the funds made
available to an international organization (agency) under a
technical assistance grant agreement with the agency and
Government of the foreign state is exempted from incometax.
Under clause (8B), the remuneration received by an employee
of the consultant is exempted from income tax provided suchemployee is either not a citizen of India or, being a citizen of
India, is resident but not ordinarily resident and the contract
of his service is approved by the prescribed authority before
the commencement of his service.
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Gratuity [Sec. 10(10)]
1) Retirement gratuity received under the PensionCode Regulations applicable to members of theDefence Service is fully exempt from tax.
2) Central / State Government Employees
3) Non government employees covered by thePayment of Gratuity Act, 1972
4) Non government employees not covered by thePayment of Gratuity Act, 1972
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Example:Example:
Mr. X retired on 15.06.2006 after completion of
26 years 8 months of service and received gratuityof Rs. 6 lakh. At the time of retirement his salary
was;
Basic salary: Rs. 5000 p.m.
D.A. : Rs.3000 p.m.
Find his taxable gratuity assuming;
1. He is non-government employee and covered bythe payment of gratuity act 1972
2. He is non-government employee and no covered
by the payment of gratuity act 1972
3. He is a government employee
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Payment of commutation of
pension [Sec. 10(10A)]
Pension is of 2 types
1. Commuted Pension
2. Un-commuted Pension
A) Employees of the central government/local
authorities/statutory corporation/members of
the defence services
B) Non government employee
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ExampleExample
Mr. X retired on 01.10.06 receiving Rs. 5000 p.m. as
pension. On 01.02.07, he commuted 60% of his
pension and received Rs. 3 lakh as commuted
pension. Required to compute his taxable pension
assuming:1) He is government employee
2) He is non government employee, receiving
gratuity of Rs. 5 lakh at the time of retirement
3) He is non government employee and is in
receipt of no gratuity at the time of retirement
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