Finance Minister Nirmala Sitharaman is scheduled to unveil the Union Budget 2024, the most awaited financial event of the year, on Tuesday, July 23.
The statement on income tax, which directly affects people’s finances, is what the average person is most interested to hear about from the Finance Minister during the presentation of the Union Budget 2023.
Citizens will have to wait and see what the FM has in store for the average person. People could examine a few income categories that are not subject to income tax. These kinds of earnings are referred to as tax-free earnings.
Here’s looking at 5 major sources of income that are tax free in India
1. Gift received from relatives
Gift received from relatives are exempt from tax by virtue of Section 56. The following will be considered as relative for the purpose of claiming such exemption.
(a) Spouse of the individual;
(b) Brother or sister of the individual;
(c) Brother or sister of the spouse of the individual;
(d) Brother or sister of either of the parents of the individual;
(e) Any lineal ascendant or descendent of the individual;
(f) Any lineal ascendant or descendent of the spouse of the individual;
(g) Spouse of the persons referred to in (b) to (f).
2. Agricultural income
Agricultural income is not taxable in the country. However, if you have non-agricultural income too, then while calculating tax on non-agricultural income, your agricultural income will be taken into account for rate purpose. Even if you have only agricultural income, you are advised to maintain some proof of your agricultural earnings/expenses.
3. Provident fund
Employee Provident Fund (EPF) offers tax-free returns for those employees who have had an active contribution for more than 5 years in his/her job. This is applicable even if the person has changed multiple organisations/employers in those 5 years.
4. Scholarships
Income earned on scholarship is tax free under sec 56(ii) of the Income Tax Act.
5. Salary Components
Chunks of your salary component that comes under reimbursement like transport allowance, meal coupons, mobile phone bills, internet bills, books and periodicals, leave travel allowance, leave travel concession etc is tax exempted.
