Page 96 - DCOM301_INCOME_TAX_LAWS_I

Unit 4: Exemptions and Deductions - I

Notes
Did u know? This exemption is, however, subject to the provisions of Section 64(2), where
the income from self acquired assets which are converted into property of the H.U.F. are
to be clubbed with the income of the person who makes the conversion subject to certain
conditions. For the purpose of this exemption, it is immaterial whether the H.U.F. has
been subject to tax in respect of the income. It is also immaterial whether the member who
has received the share of income from the family is a coparcener or not but he must be a
member of that family at the time of receiving the money.

2. Share of profit from partnership firm [Section 10(2a)]: Share income of a person being a
partner of a firm (including Limited Liability Partnerships) which is separately assessed
as such is exempt from tax. For the purposes of this clause, the share of a partner in the total
income of a firm separately assessed as such shall be an amount which bears to the total
income of the firm the same proportion as the amount of his share in the profits of the firm
in accordance with the partnership deed bears to such profits.
3. Interest income of non-residents [Section 10(4)]: In the case of non-residents any income
from interest on such securities or bonds as the Central Government may by notification
in the Official Gazette specify in this behalf including income by way of premium on the
redemption of such bonds. However in the case of an individual, any income by way of
interest on moneys standing to his credit in a Non-resident (External) Account in any bank
in India in accordance with the Foreign Exchange Regulation Act, 1973 and the Rules made
thereunder.

4. Interest income of non-residents from specified savings certificates [Section 10(4b)]: In the
case of an individual being a citizen of India or a person of Indian origin, who is a
non-resident, any income from interest on notified savings certificates issued before the
1st day of June, 2002 by the Central Government will be exempt provided he subscribes to
such certificates in foreign currency or other foreign exchange remitted from a country
outside India in accordance with the provisions of the Foreign Exchange Management Act,
1999 and any rules made thereunder. It is important to note that the exemption will be
available only to the original subscribers to the savings certificates.
5. Leave travel concession [Section 10(5)]: As per section 10(5), the amount exempt under
section 10(5) is the value of any travel concession or assistance received or due to the
assessee from his employer for himself and his family in connection with his proceeding
on leave to any place in India. The amount exempt can in no case exceed the expenditure
actually incurred for the purposes of such travel. Only two journeys in a block of four
years are exempt. Exemption is available in respect of travel fare only and also with
respect to the shortest route.

6. Tax paid on behalf of foreign companies in respect of certain income [Section 10(6a)]:
Under clause (6A), where income is derived by a foreign company by way of royalty or
fees for technical services received from government or an Indian concern in pursuance of
an agreement made by the foreign company with government or Indian concern after
March 31, 1976 which is approved by the Central Government or where the agreement
relates to matter included in the industrial policy of the government for the time being in
force and tax on such income is payable, under the terms of such agreement by the
government or the Indian concern to the Central Government, the tax so paid will not be
included in computing the total income of the foreign company. This exemption is not
available under Section 10(6A) if the agreement is entered into on or after 1.6.2002, as
amended by Finance Act, 2002. In other words, the exemption is available for the
agreements entered into up to 31.5.2002 only.

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