This article has been contributed by Riddhi Kharkia, with inputs from the entire team.
Okay, so there is an ad that has been playing for long and if you are a big cricket buff (read: IPL devotee), you surely couldn’t have missed it (okay, have you made your guesses). Let me give it away to you because this post wouldn’t begin without the name of the brand behind these advertisements. The ad that I am talking about is “Freecharge”. To be honest, the series of ads conceptualized by Freecharge have brilliantly summarized the significance of this service/brand.
Now, you must be definitely wondering—how on Earth is the Freecharge ad related to money management or this blog. Since it is no quiz and unfortunately you would not be getting points for figuring out the connect, let me give this away as well. Basically, seeing this ad, I thought of citing the incomes that are “free” of “charge” by the Government of India. So, you know what we mean by Freecharge 😉
Coming straight to it, tax is payable on all incomes earned in India by an Indian resident. However, there are some exceptions to this rule and certain categories of income have been specifically exempted from tax. Such incomes are known as Tax-free incomes.
Here, we are presenting the most common tax-free incomes that every tax payer should be aware of. The joy of tax-free income is beyond measure.
|1.||Interest on Savings Bank Account||– Tax free up to Rs. 10,000|
|2.||Long-term Capital Gain on Sale of Shares/Mutual Funds||– Wholly exempted from tax- Shares/Mutual Funds should be held for minimum 12 months
– Security transaction Tax (STT) must be paid while purchasing
|3.||Interest or any payment received on PPF/PF||– Wholly exempted from tax|
|4.||Dividends from Shares /Income from Mutual Funds||– Wholly exempted from tax- Dividend must be received from Domestic company only|
|5.||Educational Scholarships||– Wholly exempt from tax, in the hands of the person who receives it- Not necessarily a government-financed scholarship|
|6.||Amount received through Will or Inheritance||– Wholly exempted from tax- But when the amount is invested, only the income earned on that amount is taxable|
|7.||Amounts received by way of Gift on Marriage||– Wholly exempted from tax- Gift can be anything and from any person|
|8.||Money received from your EPF account||– Wholly exempted from tax, provided money is taken out after 5 years of continuous service|
|9.||Money got under Voluntary retirement Scheme (VRS)||– Tax free up to Rs, 5,00,000- Employees of Public sector companies or an authority established under a Central or State govt are also eligible|
|10.||Leave Travel Allowance (LTA) received from the employer||– Tax free up to the amount of bills of travelling provided|
|11.||Maturity or Claim or Surrender amount received by Life Insurance Company||– 100% tax-free provided the premium paid did not exceed 20% of the sum assured.|
Well this is it!
If you are aware of some income that we might have missed out in the list, then please mail us/comment on this article and we promise to make the change.
Thank you for your patience.