However, allowances and perquisites paid abroad are fully exempt under Section 10(7).
The following incomes which are payable outside India are deemed to arise in India:-
NRIs and RNORs are liable to pay tax only on their "Indian income" while tax payers who are resident in India as per Income Tax Act are taxed on their "world income".
The NRI, as per the IT Act, 1961
The definition of Non-Resident under FEMA is different from that given in the Income Tax Act. Chapter XI of the Act defines a non-resident Indian as an individual, being a citizen of India or a person of Indian origin, who is not a resident. A person is of Indian origin if he or either of his Indian parents or any of his grand parents was born in undivided India. To avail of tax sops extended to NRIs, an individual must satisfy the following criteria
The concession of extended stay is available only to Indian citizens or to "persons of Indian origin" A "Person of Indian origin" is a person who is not an Indian citizen, but was born, or either of his parents or grandparents was born in India.
Any other company or Association of Persons is treated as non-resident when the control and management of its affairs is situated throughout the year wholly outside India.
It follows that in cases of non-Individual categories of persons, it is the control and management that determines whether that person is Non-resident or otherwise. If the control and management is in India, the status is Resident, if outside India, it is non-resident.
Income Tax Criteria for RNOR (Resident but Not Ordinarily Resident)
If a NRI comes back to India and loses his NRI status, he will not be subject to tax in India on his world-wide income, for 2 years, if either of the following two conditions are satisfied :
1. He has been in India for not more than 729 days during the preceding seven financial years; or
2. He has qualified as a non-resident for nine out of 10 preceding financial years.
Similarly, if in any particular financial year, his stay in India exceeds 182 days and he loses his NRI status for that year, his income outside India will still not be taxable if any of the above two conditions are satisfied and his tax status will be that of a 'Not Ordinarily Resident' Indian.
Section |
Nature of Income |
Exemption limit, if any |
1 |
2 |
3 |
10(1) |
Agricultural income |
|
10(2) |
Share from income of
HUF |
|
10(2A) |
Share of profit from firm |
|
10(3) |
Casual and non-
recurring receipts |
Winnings from races Rs.2500/- other receipts Rs.5000/- |
10(10D) |
Receipts from life
Insurance Policy |
|
10(16) |
Scholarships to meet
cost of education |
|
10(17) |
Allowances of MP
and MLA. |
For MLA not exceeding Rs. 600/- per month |
10(17A) |
Awards and rewards |
|
|
(i) from awards by
Central/State
Government |
|
|
(ii) from approved
awards by others |
|
|
(iii) Approved rewards
from Central & State
Governments |
|
10(26) |
Income of Members of scheduled tribes residing in certain areas in North Eastern States or in the Ladakh region. |
Only on income arising in those areas or interest on securities or dividends |
10(26A) |
Income of resident of Ladakh |
On income arising in Ladakh or outside India |
10(30) |
(i) Subsidy from Tea Board under approved scheme of replantation |
|
10(31) |
(ii) Subsidy from concerned Board under approved Scheme of replantation |
|
10(32) |
Minor's income clubbed with individual |
Upto Rs. 1,500/- |
10(33) |
Dividend from Indian Companies, Income from units of Unit Trust of India and Mutual Funds, and income from Venture Capital Company/fund. |
|
10(A) |
Profit of newly established undertaking in free trade zones electronic hardware technology park on software technology park for 10 years (net beyond 10 year from 2000-01) |
|
10(B) |
Profit of 100% export oriented undertakings manufacturing articles or things or computer software for 10 years (not beyond 10 years from 2000-01) |
|
10(C) |
Profit of newly established undertaking in I.I.D.C or I.G.C. in North-Eastern Region for 10 years |
|
Income from interest |
10(15)(i)(iib)(iic) |
Interest, premium on redemption or other payments from notified securities, bonds, Capital investment bonds, Relief bonds etc. |
To the extent mentioned in notification |
10(15)(iv)(h) |
Income from interest payable by a Public Sector Company on notified bonds or debentures |
|
10(15)(iv)(i) |
Interest payable by Government on deposits made by employees of Central or State Government or Public Sector Company of money due on retirement under a notified scheme |
|
10(15)(vi) |
Interest on notified Gold Deposit bonds |
|
10(15)(vii) |
Interest on notified bonds of local authorities |
|
Income from Salary |
10(5) |
Leave Travel assistance/ concession |
Not to exceed the amount payable by Central Government to its employees |
10(5B) |
Remuneration of technicians having specialised knowledge and experience in specified fields (not resident in any of the four preceding financial years) whose services commence after 31.3.93 and tax on whose remuneration is paid by the employer |
Exemption in respect of income in the from of tax paid by employer for a period upto 48 months
|
10(7) |
Allowances and perquisites by the government to citizens of India for services abroad |
|
10(8) |
Remuneration from foreign governments for duties in India under Cooperative technical assistance programmes. Exemption is provided also in respect of any other income arising outside India provided tax on such income is payable to that Government. |
|
10(10) |
Death-cum-retirement Gratuity- |
|
|
(i) from Government |
|
|
(ii) Under payment of Gratuity Act 1972 |
Amount as per Sub-sections (2), (3) and (4) of the Act. |
|
(iii) Any other |
Upto one-half months salary for each year of completed service. |
10(10A) |
Commutation of Pension- |
|
|
(i) from government, statutory Corporation etc. |
|
|
(ii) from other employers |
Where gratuity is payable - value of 1/3 pension. Where gratuity is not payable - value of 1/2 pension. |
|
(iii) from fund set up by LIC u/s 10(23AAB) |
|
10(10AA) |
Encashment of unutilised earned leave |
|
|
(i) from Central or State government |
|
|
(ii) from other employers |
Upto an amount equal to 10 months salary or Rs. 1,35,360/- which ever is less |
10(10B) |
Retrenchment compensation |
Amount u/s. 25F(b) of Industrial Dispute Act 1947 or the amount notified by the government, whichever is less. |
10(10C) |
Amount received on voluntary retirement or termination of service or voluntary separation under the schemes prepared as per Rule 2BA from public sector companies, statutory authorities, local authorities, Indian Institute of Technology, specified institutes of management or under any scheme of a company or Co-operative Society |
Amount as per the Scheme subject to maximum of Rs. 5 lakh |
10(11) |
Payment under Provident Fund Act 1925 or other notified funds of Central Government |
|
10(12) |
Payment under recognised provident funds |
To the extent provided in rule 8 of Part A of Fourth Schedule |
10(13) |
Payment from approved Superannuation Fund |
|
10(13A) |
House rent allowance |
least of- |
|
|
(i) actual allowance |
|
|
(ii) actual rent in excess of 10% of salary |
|
|
(iii) 50% of salary in Mumbai, Chennai, Delhi and Calcutta and 40% in other places |
10(14) |
Prescribed [See Rule 2BB (1)] special allowances or benefits specifically granted to meet expenses wholly necessarily and exclusively incurred in the performance of duties |
To the extent such expenses are actually incurred. |
10(18) |
Pension including family pension of recipients of notified gallantry awards |
|
Exemptions to Non-citizens only |
10(6)(i)(a) and (b) |
(i) passage money from employer for the employee and his family for home leave outside India |
|
|
(ii) Passage money for the employee and his family to 'Home country' after retirement/termination of service in India. |
|
10(6)(ii) |
Remuneration of members of diplomatic missions in India and their staff, provided the members of staff are not engaged in any business or profession or another employment in India. |
|
10(6)(vi) |
Remuneration of employee of foreign enterprise for services rendered during his stay in India in specified circumstances provided the stay does not exceed 90 days in that previous year. |
|
10(6)(xi) |
Remuneration of foreign Government employee on training in certain establishments in India. |
|
Exemptions to Non-residents only |
|
Refer Chapter VII (Para 7.1.1) |
|
|
Chapter VIII (Para 8.4) |
|
|
Chapter IX |
|
|
Chapter X (Para 10.4) |
|
Exemptions to Non-resident Indians (NRIs) only |
|
Refer Chapter XI |
|
Exemptions to funds, institutions, etc. |
10(14A) |
Public Financial Institution from exchange risk premium received from person borrowing in foreign currency if the amount of such premium is credited to a fund specified in section 10(23E) |
|
10(15)(iii) |
Central Bank of Ceylon from interest on securities |
|
10(15)(v) |
Securities held by Welfare Commissioners Bhopal Gas Victims, Bhopal from Interest on securities held in Reserve Bank's SGL Account No. SL/DH-048 |
|
10(20) |
any local Authority |
(a) Business income derived from Supply of water or electricity any where. Supply of other commodities or service within its own jurisdictional area. |
|
|
(b) Income from house property, other sources and capital gains. |
10(20A) |
Housing or other Development authorities |
|
10(21) |
Approved Scientific Research Association |
|
10(23) |
Notified Sports Association/ Institution for control of cricket, hockey, football, tennis or other notified games. |
|
10(23A) |
Notified professional association/institution |
All income except from house property, interest or dividends on investments and rendering of any specific services |
10(23AA) |
Regimental fund or Non-public fund |
|
10(23AAA) |
Fund for welfare of employees or their dependents. |
|
10(23AAB) |
Fund set up by LIC of India under a pension scheme |
|
10(23B) |
Public charitable trusts or registered societies approved by Khadi or Village Industries commission |
|
10(23BB) |
Any authority for development of khadi or village industries |
|
10(23BBA) |
Societies for administration of public, religious or charitable trusts or endowments or of registered religious or charitable Societies. |
|
10(23BBB) |
European Economic Community from Income from interest, dividend or capital gains |
|
10(23BBC) |
SAARC Fund |
|
10(23C) |
Certain funds for relief, charitable and promotional purposes, certain educational or medical institutions |
|
10(23D) |
Notified Mutual Funds |
|
10(23E) |
Notified Exchange Risk Administration Funds |
|
10(23EA) |
Notified Investors Protection Funds set up by recognised Stock Exchanges |
|
10(23FB) |
Venture capital Fund/ company set up to raise funds for investment in venture Capital undertaking |
Income from investment in venture capital undertaking |
10(23G) |
Infrastructure capital fund, or infrastructure capital company |
Income from dividend, interest and long term capital gains from investment in approved infrastructure enterprise |
10(24) |
Registered Trade Unions |
Income from house property and other sources |
10(25)(i) |
Provident Funds |
Interest on securities and capital gains from transfer of such securities |
10(25)(ii) |
Recognised Provident Funds |
|
10(25)(iii) |
Approved Superannuation Funds |
|
10(25)(iv) |
Approved Gratuity Funds |
|
10(25)(v) |
Deposit linked insurance funds |
|
10(25A) |
Employees State Insurance Fund |
|
10(26B)(26BB) and (27) |
Corporation or any other body set up or financed by and government for welfare of scheduled caste/ scheduled tribes/backward classes or minorities communities |
|
10(29) |
Marketing authorities |
Income from letting of godown and warehouses |
10(29A) |
Certain Boards such as coffee Board and others and specified Authorities |
|
Investment Opportunities
