Exempt Income

1. Amount received from an insurance company on death of dependent being a person with disability in respect of an insurance policy issued to him for the maintenance of such dependent
2. Amount received under a Keyman Insurance Policy (for definition of “Keyman Insurance Policy” refer to Explanation to this sub-section)
3. Sum received under an insurance policy issued on or after 1st April 2003, where premium payable for any of the years exceeds 20% of the actual capital sum assured unless such sum is received on death of a person
4. Sum received under an insurance policy issued on or after 1st April 2012, where premium payable for any of the years exceeds 10% of the actual capital sum assured unless such sum is received on death of a person.
5. Sum received by a person with a disability or severe disability as referred to section 80U under an insurance policy issued on or after 1st April 2013, where premium payable for any of the years exceeds 15% of the actual capital sum assured, unless such sum is received on death of a person.

1. Payment is on death or on retirement after specified fund, age or his becoming incapacitated prior to such retirement
2. Amount transferred from approved superannuation fund to NPS scheme is exempt from tax

1. Fund is approved by CIT
2. The income is applied or accumulated for application towards objects of the fund only
3. The funds are invested as permitted under section 11(5)
4. The approval shall have effect for 3 years at a time

2. It shall not apply to investment made after 31 March 2000

1. VCF/VCC granted registration under SEBI Act
2. VCF/VCC granted registration as category 1 Alternative investment fund with effect from A.Y. 2013-14
3. VCF is operating under a registered trust deed or operating as venture capital scheme of UTI
4. VCF/VCC fulfils conditions specified by SEBI
5. VCU must be referred to in SEBI (VCF) Regulations, 1996 and notified by CBDT
6. VCU must be engaged in specified businesses or industries. This condition is no longer applicable w.e.f. A.Y. 2013-14
7. VCU must be domestic company, whose shares are not listed on recognised stock exchange in India
8. Not applicable to income of VCC or VCF being an investment fund specified in Explanation 1(a) to Section 115UB from A.Y 2016-17

• Income in respect of Units of UTI units or Mutual Fund specified under Section 10(23D)

1. Such equity shares should be of a company which is part of BSE-500 Index as on 1st March 2003 or where shares are allotted through public issue after 1st March 2003 and listed on a recognised stock exchange in India before 1st March 2004
2. Transactions of purchase/ sale are entered through recognised stock exchanges in India

1. Land should have been used for agricultural purposes by the individual or his parent or the HUF for at least last 2 years immediately preceding the date of transfer
2. Exemption applies to compensation/ consideration/ additional compensation received on or after 1st April 2004

1. Land or building or both owned as on 2nd June 2014 and transferred under the scheme
2. Land pooling ownership certificate issued under the scheme in respect of land or building or both referred to at point (1) above
3. Reconstituted plot or land received in lieu of land or building or both (referred to at point 1 above) under the scheme and such plot or land is transferred after 2 years from the end of the financial year in which the possession of such land or plot was handed over to the assessee

2. LTCG of a company is however includible in computing book profits under section 115JB from A.Y. 2007-08

3. W.e.f 1st April 2018 this exemption is not available to income arising from transfer of equity share, acquired on or after 1st October 2004 and such transaction were not chargeable to STT. However, exemption should continue to be available to certain acquisitions to be notified by the Central Government. Vide press release dated 3rd April 2017, the Central Government issued a draft notification for public comments. The draft notification provides that all transactions of acquisitions of equity shares (acquired on or after 1st October 2004 and are not subject to STT) are notified under Section 10(38) except the following:

1. Acquisition of listed equity shares (not frequently traded on a recognised stock exchange in India) through a preferential issue, other than preferential issues to which Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009) does not apply;
2. Transaction of purchase of listed equity share in a company is not entered through a recognised stock exchange;
3. Acquisition of equity shares of a company during the period between the date on which the company is delisted and again relisted on a recognised stock exchange

The terms ‘frequently traded shares’, ‘listed’ and ‘recognised stock exchange’ are defined in the notification.

The press release lists down certain mode of acquisitions where exemption should continue to be available (such as through IPO, FPO, bonus or right issue, etc)

4. Exemption not available in respect of income arising from transfer of unit of business trust, which were acquired in consideration of a transfer referred to in Section 47(xvii)

1. The entity has object of regulating or administering any activity for the benefit of the general public
2. The entity does not engage in any commercial activity

1. Storage and sale is pursuant to an agreement or arrangement between the foreign company and the Central Government
2. Foreign company and arrangement/ agreement are notified by the Central Government

1. Free Trade Zone (FTZ)

2. Electronic Hardware Technology Park (EHTP) or Software Technology Park (STP) w.e.f. A.Y. 1994-95

3. Special Economic Zone (SEZ) w.e.f. A.Y. 2001-02

1. Not formed by splitting up or reconstruction of existing business or by transferring used plant and machinery
2. Manufactures/produces articles or things (including computer software) and cutting and polishing of precious and semi-precious stones
3. No deduction under section 80-IA, under section 80-IB, under section 80HH, and under section 80HHA in relation to the profits and gains of the industrial undertaking
4. FTZ/EHTP/STP/SEZ to be notified by Central Government
5. Deduction shall be allowed only up to A.Y. 2011-12. However, for SEZ unit this limitation does not apply
6. Report of a Chartered Accountant certifying deduction to be furnished
7. Profit from domestic sales up to 25% of total sales would be deemed to be profits from exports only for the A.Y. 2001-02
8. Availing the concession is at the option of the assessee
9. Profits from onsite development of computer software outside India would be deemed to be profits from export
10. In the event of transfer of undertaking under amalgamation or demerger, the deduction shall continue to be allowed to the amalgamated or the resulting company
11. No deduction shall be admissible to amalgamating or demerged company in the year of amalgamation or demerger
12. Deduction not allowable if return not filed by due date under section 139(1)
13. Does not apply to any undertaking being unit referred to in section 2(zc) of the SEZ Act, 2005, which begins to manufacture or produce articles or things or computer software after 1st April 2005 in any SEZ
14. The amount transferred to Reserve Account should be utilised for purposes specified in sub-section (1B)

Profits from export computed as profits of the undertaking in proportion to export turnover to total turnover of the under-taking.

W.e.f 1 April 2018 deduction shall be allowed from total income of the assessee, before giving effect to provision of section 10AA and the deduction shall not exceed total income.

1. Not formed by splitting up or reconstruction of existing business or by transferring used plant and machinery.
2. In the event of transfer of undertaking under amalgamation or demerger, the deduction shall continue to be allowed to the amalgamated or the resulting company
3. No deduction shall be admissible to amalgamating or demerged company in the year of amalgamation or demerger.
4. Report of a Chartered Accountant certifying deduction to be furnished.
5. The amount transferred to Reserve Account should be utilised for purposes specified in sub-section (2).
6. Assessee engaged in ‘specified business’ as specified in Section 35AD, to choose between deduction under Section 10AA and section 35AD.
7. Deduction will not be available from A.Y. 2021-22

1. Undertaking which has claimed deduction under section 10A or 10B for any assessment year shall not be entitled to this deduction
2. Manufactures eligible articles or things without the use of imported raw materials. It employs 20 or more workers
3. Not formed by splitting up or reconstruction of the existing business or by transferring used plant and machinery
4. 90% or more of its sales during the relevant previous year are by way of the exports of the eligible articles or things
5. Report of a Chartered Accountant certifying deduction to be furnished. No other deduction allowed under any other section in respect of the eligible export profit

1. Manufactures or produces any article or thing on or after 1st April 1998
2. Not formed by splitting up or reconstruction of the existing business or by transferring used plant and machinery
3. No deduction under Sections 80HH, 80HHA, 80-I, 80-IA, 80-IB or 80JJA in relation to profits and gains of the industrial undertaking
4. Assessee has an option of not claiming the benefit for a particular A.Y. if such declaration in writing is furnished to the assessing officer before the due date of furnishing the return of income under Section 139(1)