Section 10(15) of the Income Tax Act: Exemptions and Key Features

Section 10(15) of the Income Tax Act is an important provision that exempts certain types of incomes from being taxed. In this blog, we will discuss this provision in detail, covering its scope, applicability, and key features.

Introduction:

The Income Tax Act, 1961 is the primary statute that governs the taxation of incomes in India. Section 10(15) of the Act provides for the exemption of certain types of incomes from taxation. These incomes are specified in the section itself and are granted exemption subject to certain conditions.

Scope of Section 10(15):

Section 10(15) covers a wide range of incomes that are exempt from taxation. These include the following:

1. Interest on notified securities: Interest earned on notified securities such as bonds, debentures, and government securities is exempt from tax under this section.
2. Interest on certain deposits: Interest earned on deposits made with a scheduled bank, cooperative society engaged in banking business, or post office is exempt from tax.
3. Income from units of mutual funds: Any income earned from units of mutual funds specified under section 10(23D) is exempt from tax.
4. Income from specified institutions: Any income earned by a university or other educational institution, hospital, medical institution, or other institution established for charitable purposes is exempt from tax.

Applicability of Section 10(15):

The provisions of section 10(15) are applicable to all taxpayers, whether individuals, companies, or any other entities, who earn any of the incomes specified in the section. However, the exemption is subject to certain conditions, as mentioned below.

Conditions for exemption under Section 10(15):

The exemption under section 10(15) is subject to certain conditions, which are as follows:

1. The income must fall under any of the categories specified in the section.
2. The income must be earned by the taxpayer during the previous year.
3. The taxpayer must be a resident of India.
4. The income must be credited or paid to the taxpayer’s account.
5. The income must be disclosed in the taxpayer’s income tax return.

Key Features of Section 10(15):

1. No limit on the amount of exemption: There is no upper limit on the amount of income that can be exempted under section 10(15). This means that taxpayers can enjoy full exemption on the income earned under the specified categories.
2. Exemption is available on a per-year basis: The exemption under section 10(15) is available on a per-year basis. This means that taxpayers need to satisfy the conditions for exemption for each year in which they earn the income.
3. The exemption is not applicable to non-residents: The exemption under section 10(15) is available only to residents of India. Non-residents are not eligible for the exemption.
4. Exemption is not available for income from non-specified sources: The exemption under section 10(15) is available only for income from specified sources. Income from other sources, such as savings bank account interest, is not exempt under this section.
5. Income must be disclosed in the income tax return: To claim the exemption under section 10(15), the income must be disclosed in the taxpayer’s income tax return. Failure to disclose the income can result in penalties and other legal consequences.

Examples of incomes exempt under Section 10(15):

1. Interest earned on government securities: Interest earned on government securities such as treasury bills, bonds, and debentures is exempt from tax under Section 10(15).
2. Interest earned on post office deposits: Interest earned on deposits made in post offices is exempt from tax under Section 10(15).
3. Income earned from specified institutions: Income earned by institutions such as hospitals, universities, and educational institutions established for charitable purposes is exempt from tax under Section 10(15).
4. Income from units of specified mutual funds: Any income earned from units of mutual funds specified under section 10(23D) is exempt from tax.
5. Interest earned on deposits with scheduled banks and cooperative societies: Interest earned on deposits made with scheduled banks or cooperative societies engaged in banking business is exempt from tax under Section 10(15).

Conclusion:

Section 10(15) of the Income Tax Act is an important provision that provides exemption to certain types of incomes from taxation. The scope of the section is wide, covering various types of incomes such as interest on notified securities, interest on certain deposits, income from units of mutual funds, and income from specified institutions. However, the exemption is subject to certain conditions, and taxpayers must ensure that they meet these conditions to claim the exemption.

Read more useful content:

• section 145 of income tax act
• section 10e of income tax act
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• section 94b of income tax act
• section 206aa of income tax act

Frequently Asked Questions (FAQs)

1. What is Section 10(15) of the Income Tax Act?

Section 10(15) of the Income Tax Act is a provision that provides exemption to certain types of incomes from taxation.

2. What are the types of incomes that are exempt under Section 10(15)?
The types of incomes that are exempt under Section 10(15) include interest on government securities, interest on post office deposits, income from specified institutions, income from units of specified mutual funds, and interest on deposits with scheduled banks and cooperative societies.

3. Who is eligible for exemption under Section 10(15)?
Residents of India who earn income from the specified sources are eligible for exemption under Section 10(15).

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4. What are the conditions for exemption under Section 10(15)?
The conditions for exemption under Section 10(15) include the income falling under the specified categories, the income being earned during the previous year, the taxpayer being a resident of India, the income being credited or paid to the taxpayer’s account, and the income being disclosed in the taxpayer’s income tax return.

5. Is there any limit on the amount of exemption under Section 10(15)?
No, there is no upper limit on the amount of income that can be exempted under Section 10(15).

6. Is the exemption under Section 10(15) available on a per-year basis?
Yes, the exemption under Section 10(15) is available on a per-year basis, and taxpayers need to satisfy the conditions for exemption for each year in which they earn the income.

7. Can non-residents claim exemption under Section 10(15)?
No, the exemption under Section 10(15) is available only to residents of India. Non-residents are not eligible for the exemption.

8. What happens if the income exempted under Section 10(15) is not disclosed in the income tax return?
Failure to disclose the exempted income in the income tax return can result in penalties and other legal consequences.

9. Are all mutual funds eligible for exemption under Section 10(15)?
No, only mutual funds specified under section 10(23D) are eligible for exemption under Section 10(15).

10. What is the significance of understanding Section 10(15)?
Understanding Section 10(15) is significant as it can help taxpayers minimize their tax liabilities and maximize savings by taking advantage of the exemptions available under this provision.