1. Agriculture Income [Section 10(1)]
Agricultural income from land situated in India is fully exempted.
2. Any sum received by a Co-parcener from Hindu Undivided Family (H.U.F.) [Section 10(2)]
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 is fully exempted. This is subject to the provisions of section 64(2).
Out of the income of HUF, if a co-parcener gets any sum of money, it is fully ‘exempted in the hands of its co-parceners. It is exempted from tax whether the income of HUF was chargeable to tax or not.
Example-1. HUF earned ` 5,00,000 during the previous year and paid tax on its income. Mr. A, a co-parcener is an employee and earns a salary of ` 20,000 p.m. During the previous year Mr. A also received ` 1,00,000 from HUF. Mr. A will pay tax on his salary income but any sum of money received from his HUF is not chargeable to tax in Mr. A’s hands.
Example-2. HUF earned ` 90,000 during the previous year 2013-14 and it is not chargeable to tax. Mr. A, a co-parcener is earning individual income of ` 20,000 p.m. Besides his individual income, Mr. A receives ` 30,000 from his HUF.
Mr. A will pay tax on his individual income but any sum of money received by him from his HUF is not chargeable to tax in the hands of co-parcener whether the HUF has paid tax or not on that income.
3. Share of Income from the Firm [Section 10(2A)]
In 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 shall be fully exempted.
The share of partner in the total income of the firm shall be in same proportion as is given in partnership deed.
4. Interest paid to Non-Resident [Section 10(4)(i)]
The amount of interest payable to a non-resident on such securities or bonds as the Central Govt. may, by notification in the Official Gazette, specify in this behalf, including income by way of premium on the redemption of such bonds, shall be exempt from tax. The exemption under this section shall not be allowed on interest on bonds or securities issued on or after 1-6-2002.
5. Interest to Non-Resident on Non-Resident (External) Account [Section 10(4)(ii)]
Any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India shall be exempt from tax in case of an individual who is a person resident outside India or is a person who has been permitted by the RBI to maintain the aforesaid account.
The person residing outside India shall have the same meaning as defined under Foreign Exchange Regulation Act, 1973, FEMA, 1999. This exemption shall not be available on any income by way of interest paid or credited on or after 1-4-2005.