As we know, section 10 of the Income Tax Act covers a list of income which do not form part of the total income. The present article highlights the following sections exempting interest to non-resident –
1. Section 10(4)(i) – Interest from notified bonds or securities;
2. Section 10(4)(ii) – Interest from the amount standing credit in Non-Resident (External Account); and
3. Section 10(4B) – Interest on savings certificate issued before 1st June 2002.
Category of the person eligible for exemption under section 10(4)(i) – Non-resident
Type of exemption available under section 10(4)(i)
1. Any income by way of interest received from certain notified bonds or securities; and
2. Any income by way of the premium received on the redemption of such notified bonds.
Category of the person eligible for exemption under section 10(4)(ii)-
1. Any individual being a person resident outside India [as defined under section 2(w) of the Foreign Exchange Management Act, 1999].
2. Any individual who is permitted by the Reserve Bank of India to maintain the Non-Resident (External Account).
Any income by way of interest received from the money standing credit in a Non-Resident (External Account).
The said Non-Resident (External Account) should be in any bank in India, and it should be in accordance with the Foreign Exchange Management Act, 1999 and the rules made thereunder.
Category of the person eligible for exemption under section 10(4B)-
Any individual, being a person of Indian origin or a citizen of India, who is a Non-Resident.
It should be noted here that the Explanation (a) to section 10(4B) states that the person shall be deemed to be of the Indian origin if either he or any of his parents or any of his grandparents were born in undivided India.
Any income by way of interest received from interest on savings certificate issued before 1st June 2002.
Further, it is mandatory that in order to claim the exemption, the individual should have subscribed to such savings certificate in convertible foreign exchange remitted from the country outside India. Such remittance should be in accordance with the provisions of the Foreign Exchange Management Act, 1999 and the rules made thereunder.
Table – Articles on Section 10 Exemptions
|1||Section 10(1)– Exemption to Agricultural Income|
|2||Section 10(2) Exemption to amount received by co-parcener from HUF|
|3||Section 10(2A) Exemption towards share of income from firm/LLP|
|4||Exemptions towards interest to non-residents | Section 10(4) & 10(4B)|
|5||Exemption on Tax paid by Govt or Indian concern on certain income of a foreign company|
|6||Section 10(7) Perquisites/allowances exemption to Govt employees serving outside India|
|7||Exemption- Section 10(8A) & section 10(8B) of Income Tax Act|
|8||Exemption towards commuted value of pension Section 10(10A)|
|9||Exemption towards retrenchment compensation received by workman Section 10(10B)|
|10||Section 10(10BC) Exemption towards compensation received on account of any disaster|
|11||Section 10(10C) Exemption of amount received on voluntary retirement|
|12||Exemption towards tax paid by employer on non-monetary perquisites: Section 10(10CC)|
|13||Section 10(10D) Exemption towards amount received under a Life Insurance Policy|
|14||Exemption for amount received from Statutory & Recognized PF|
|15||Exemption for payment from approved superannuation fund Section 10(13)|
|16||Income Tax Exemption on prescribed allowances/ benefits | Section 10(14)|
|17||Section 10(15) Exemption- Interest on Bonds, Debentures, Securities|
|18||Scholarship exemption | Section 10(16) | Income Tax Act 1961|
|19||Exemption towards income for administration of Charitable or Religious Institution|
|20||Section 10(32) Exemption | Income of minor clubbed with parent|
|21||Exemption for dividend income received from Indian Company | Section 10(34)|
|22||Section 10(34A) Exemption towards income received by a shareholder on buy back of shares|
|23||Section 10(35) Exemption towards income received from units|
|24||Section 10(37) Exemption towards Capital Gain arising on Compulsory Acquisition of Urban Agricultural Land|