8 Fully Tax-Free Income Sources in India in the New Tax Regime. Taxpayers often get the impression that everything they earn, regardless of where they live, is taxable, but Indian tax law permits some totally legal income sources that are exempt from taxation, even in spite of a New Tax Regime. Adversaries should get this information, as knowing the exemptions can be very good for you! The first is that agricultural income based on land that is engaged in agriculture for various products in India is excluded from the income tax. This consists of rent income from farm fields and income from sale of produce but may impact tax rate calculations in certain circumstances.
Secondly, life insurance dividends paid upon insurance payment upon maturity might be tax free if policy provisions are fulfilled, e.g. premium limits imposed by the applicable rules. Crucially, death benefits received on behalf of nominees are still wholly exempt. Third, gifts from specified relatives spouse, parents, siblings, and children are exempt without any upper limit.
But income thereafter accrued from those gift funds could be taxable. Fourth, gifts received on occasion of marriage are entirely tax-free for weddings, regardless of whether they are received from family or friends. Fifth, if you partner (partnering) in a firm or LLP, your share of profit from partnership income is exempt in your hands, as tax is already paid (for the firm) on the income from your partnership.
But the firm’s salary or interest is taxable. 6th, the interest collected in PPF and SSY is exempt-exempt-exempt, both are good long-term funds options. Seventh, tuition for educational purposes is completely exempt; certain government-sanctioned awards could likewise be exempt. Last but not the least, it should also be noted, that commuted pension of retired government employees is all tax-free, while the exemptness of the private employees is subject to the eligibility rules. Those exemptions are valid provisions under Indian tax law not a loophole. Because tax laws can be shifted and exemptions frequently have caveats, taxpayers should make sure they are eligible for benefits and consult a qualified tax attorney as necessary.
