Great news for individuals with a fixed salary! The salaried workforce often experiences anxiety when it comes to tax-saving strategies. This year, the deadline for submitting your Income Tax Return (ITR) was set for July 31.
Subsequently, individuals had to endure prolonged waits for their tax refunds. However, it’s worth noting that certain types of income do not require any tax payments, and this information is not widely known. These income sources need to be disclosed in your Income Tax Return (ITR).
Income earned in any given financial year, for which no tax obligation exists, is referred to as non taxable income. This category of income is entirely exempt from income tax calculations.
Let’s explore the various types of income for which you are not required to pay any taxes.
Gifts and inheritances:
Income or earnings received by the taxpayer as a result of gifts from family members are typically regarded as non taxable income. If the relative resides abroad, there are certain exceptions.
Only gifts from non-family members are exempt if the total value of the gift is less than Rs 50,000. Taxes are not applied to gifts that are received in conjunction with a taxpayer’s wedding.
Life Insurance Returns:
The proceeds from life insurance policies, which encompass both the maturity benefits and the death benefits, are typically exempt from taxation. However, the tax treatment may vary based on the insurance amount involved.
It’s important to note that when these policies mature or in the event of a policyholder’s demise, such returns are generally exempt from income tax, providing a tax-efficient way to safeguard one’s financial future.
Agricultural income:
As outlined in Section 10(1) of the Income Tax Act, it is exempted from taxation. This includes revenue from agricultural and farming activities, as well as earnings from poultry and cattle rearing, all of which are not subject to income tax.
Gratuity:
Gratuity, a sum granted to employees in recognition of their devoted and lengthy tenure with a company, remains untaxed. Government employees enjoy full tax exemption on their gratuity.
Non-government employees governed by the Gratuity Act of 1972 are eligible for tax exemption if their gratuity does not exceed Rs 10 lakh. Under this Act, employees become eligible for gratuity payments after five years of continuous service with a single organization.
Scholarship and Rewards:
Scholarships and certain rewards fall under the category of non-taxable income, offering recipients the benefit of tax exemption. Scholarships for education or research, are typically not subject to income tax.
This allows individuals to pursue their educational and professional goals without the burden of additional taxation on these forms of financial support.
Recipients of Gallantry Awards like the Mahavir Chakra, Paramvir Chakra, Vir Chakra, and similar honors who receive a pension are exempt from paying taxes on their pension income.
Interest received from deposit schemes:
Interest generated from specific schemes, such as the Sukanya Samriddhi Scheme, gold deposit bonds, and tax-free infrastructure bonds, is not subject to tax obligations, granting these earnings an exemption from taxation.