Income Tax Law (B.Com) 5th Sem Previous Year Solved Question Paper 2022

Certain incomes fall outside the purview of the total income and are exempt from income tax. These exclusions are designed to encourage specific activities, provide relief to certain individuals, or address social and economic objectives.

1. Agricultural Income:
 - Income generated from agricultural operations is exempt from income tax. This includes income from the cultivation of land, farming, and agricultural practices. However, income derived from agricultural processing or activities beyond basic cultivation may be taxable.

2. Gifts and Inheritance:
 - Gifts received, whether in cash or kind, from specified relatives or on special occasions like marriage are exempt from income tax. Similarly, any inheritance or bequest received is not considered part of the total income.

3. Gratuity:
 - Gratuity received by employees, as per the rules specified under the Payment of Gratuity Act, is exempt from income tax. The exemption limit is based on the employment period and salary.

4. Leave Travel Allowance (LTA):
 - LTA received by an individual for travel within India, along with family, on leave is exempt from income tax, subject to certain conditions and limits.

5. Dividends:
 - Dividends received from domestic companies by an individual shareholder are currently exempt from income tax. However, dividends distributed by mutual funds may be subject to a dividend distribution tax.

6. Interest on PPF and EPF:
 - Interest earned on investments in Public Provident Fund (PPF) and Employees’ Provident Fund (EPF) is exempt from income tax.

7. Scholarships and Awards:
 - Scholarships granted to students for education and certain awards received for exceptional achievements are exempt from income tax.

8. Life Insurance Proceeds:
 - The sum received under a life insurance policy, including bonus, is exempt from income tax.

9. Income of Charitable Trusts: 
 - Incomes of entities registered as charitable or religious trusts may be exempt from tax if they meet specified conditions.

10. Compensation for Wrongful Termination:
 - Compensation received by an individual for wrongful termination or any damages for such termination is exempt from income tax.