Income exempt from Income Tax

Exemptions are those incomes which are exempt from tax.¹ In other words, they do not form a part of the total income calculated for taxation purposes.

Incomes Exempt from Tax (Applicable under Old and New Tax Regime)

Given below are some examples of income that are exempted from tax, subject to certain conditions:

• Agricultural income²
• Any payments received from family income or income of an estate belonging to the family by an individual member of a Hindu Undivided Family³
• Share of profit from a firm⁴
• Remuneration received by foreign diplomats⁵ 
• Death-cum-retirement gratuity  (modified applicability under the new regime)⁶
• Scholarship granted to meet the cost of education⁷
• Family pension received by families of Armed Forces  (modified applicability under the new regime)⁸
• Foreign allowance granted by the  Government of India to its employees posted abroad⁹ 
• Tax paid on behalf of foreign companies in India¹⁰
• Income of mutual fund set up by a public sector bank or financial institution¹¹ 
• Compensation received by victims of any disaster¹²
• Any sum of money from a life insurance policy. This includes bonuses but does not cover Keyman insurance policies¹³
• Daily allowance of Member of Parliament or State Legislature¹⁴

Incomes Exempt from Tax (Applicable Under Old Regime Only)

• Leave Travel Concession (LTC)¹⁵
• House Rent Allowance (HRA)¹⁶
• Certain other allowances and perquisites that were previously exempt (e.g., conveyance allowance, transport allowance, uniform allowance)¹⁷
• Many employer-related allowances and reimbursements¹⁸
• Family pension beyond the limited deduction under section 57(iia)¹⁹
• Other salary-related exemptions and allowances listed in the Income Tax Act and relevant notifications¹⁸

Summary Table of Exemptions

Further, apart from the ones listed above, there are multiple exemptions under income tax law. To read more click here.

Some institutions are also exempt from giving tax such as India Wildlife Conservation Trust, charitable organizations etc. Read here to see more on exempted institutions.

1. Section 11, Income-tax Act, 2025. [↩]
2. Sl. No. 1., Schedule II, Income-tax Act, 2025. [↩]
3. Sl. No. 1., Schedule III, Income-tax Act, 2025. [↩]
4. Sl. No. 3., Schedule III, Income-tax Act, 2025. [↩]
5. Sl. No. 2., Schedule IV, Income-tax Act, 2025. [↩]
6. Sl. No. 8., Schedule II, Income-tax Act, 2025. [↩]
7. Sl. No. 9., Schedule II, Income-tax Act, 2025. [↩]
8. Sl. No. 16., Schedule III, Income-tax Act, 2025. [↩]
9. Schedule III (Item 9), Income Tax Act, 2025. [↩]
10. Sl. No. 14, Schedule IV, Income-tax Act, 2025. [↩]
11. Sl. No. 21, Schedule VII, Income-tax Act, 2025. [↩]
12. Sl. No. 3, Schedule III, Income-tax Act, 2025. [↩]
13. Sl. No. 2, Schedule II, Income-tax Act, 2025. [↩]
14. Sl. No. 5, Schedule III, Income-tax Act, 2025. [↩]
15. Sl. No. 8, Schedule III, Income-tax Act, 2025. [↩]
16. Sl. No. 11, Schedule III, Income-tax Act, 2025. [↩]
17. Sl. No. 12, Schedule III, Income-tax Act, 2025. [↩]
18. Schedule II, Income-tax Act, 2025. [↩] [↩]
19. Section 11, Income-tax Act, 2025. [↩]