Provisions of section 10(15) of the Income Tax Act provides exemption towards various Interest Income. The provisions of said section 10(15) are explained in the present article.

Interest Income exempted under section 10(15) of Income Tax Act, 1961

Section 10(15) of the Income Tax Act consists of various sub-sections through which various interest income are exempted. Each such-sections are explained in the table below-

Relevant sub-section of section 10(15) Particulars of available exemption Additional Conditions (if any)
(i) Interest income or premium on redemption or other payments on notified securities; bonds; annuity certificates; savings and other certificates.
(iib) Interest income on notified Capital Investment Bonds issued before 1st June 2002. The exemption is available only to Individual and HUF.
(iic) Interest income on notified Relief Bonds. The exemption is available only to Individual and HUF.
(iid) Interest income on notified Bonds issued before 1st June 2002. The exemption is available to following persons-

  • A Non-resident Indian (individual owning the bonds).
  • An Individual (owning the bonds in the form of nominee or survivor of the non-resident Indian).
  • An Individual (bonds have been gifted by the non-resident Indian).
Bonds should have been purchased by the non-resident Indian in foreign exchange.

Interest and principal are not allowed to be taken out of India.

(iii) Interest on securities issued by the Department of the Central Bank of Ceylon.
(iiia) Interest income on deposits made with the scheduled bank with approval of RBI.
(iiib) Interest payable to the Nordic Investment Bank on loan advanced by it to a project approved by the Central Government.
(iiic) Interest payable to the European Investment Bank on loan granted in pursuance of framework agreement dated 25th November 1993.
(iv)(a) Interest received from Government or a local authority on money borrowed prior to 1st June 2001 from sources outside India.
(iv)(b) Interest received from an industrial undertaking in India on money borrowed by it under a loan agreement entered prior to 1st June 2001 with the approved foreign financial institution.
(iv)(c) Interest received from an industrial undertaking in India on money borrowed by it prior to 1st June 2001 in a foreign country. Money is borrowed to purchase raw-material; plant and machinery; components outside India.
(iv)(d) Interest received from the specified Industrial Finance Corporation of India on money borrowed from sources outside India before 1st June 2001.
(iv)(e) Interest received from other financial institution or banking company on money borrowed by it from sources outside India before 1st June 2001 under a loan agreement approved by the Central Government.
(iv)(f) Interest received from an industrial undertaking in India, on money borrowed by it in foreign currency under the loan agreement approved by the Central Government before 1st June 2001.
(iv)(fa) Interest payable by the schedule bank on deposits, in foreign currency, approved by the RBI. The exemption is available to non-resident or person who is not ordinarily resident.
(iv)(g) Interest received from a public company, which is eligible for deduction under section 36 (1)(viii). The main object of such a company should be providing of long-term housing finance. The company should be formed and registered in India.
(iv)(h) Interest received from public sector company in respect of notified bonds/ debenture. The holder of the bonds/ debenture should register his name and holding with the public sector company.
(iv)(i) Interest income from Government on deposits made by an employee of the Central or State Government or public sector company. The deposits should have been made out of the moneys due to the employee on account of his retirement.
(v) Interest on-

  • Securities held by the Welfare Commissioner, Bhopal Gas Victims in the Reserve Bank SGL Account no. SL/DH 048.
  • Deposits made for the benefits of the victims of Bhopal Gas Leak Disaster held in such account with the Reserve Bank or notified Public Sector Bank
(vi) Interest on notified-

  • Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999; or
  • Deposit certificates issued under the Gold Monetisation Scheme, 2015.
(vii) Interest income on notified bonds issued by-

  • A local authority; or
  • A State Pooled Finance Entity.
(viii) Interest income received by a non-resident or person who is not ordinarily resident in India. Such income is earned by a deposit made on or after 1st April 2005 in an Offshore Banking Unit.
(ix) Interest income payable, by a unit situated in an International Financial Services Centre, in respect of monies borrowed on or after 1st September 2019, to a non-resident

Table – Articles on Section 10 Exemptions

Sr. No. Particulars
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

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