Income Tax: You don't have to pay even a rupee tax on these 5 incomes, know this before filing ITR

Breaking News, Digital Desk- (Tax Free Income) Income tax rules in India are designed to ensure that individuals and entities pay taxes on their income. 

However, certain types of income are exempt from tax. Understanding these sources of tax-free income can help individuals and businesses make informed financial decisions.

Agriculture Income-

The most popular category of tax-free income is income from agriculture. Income earned from agricultural activities is exempt from income tax under Section 10(1) of the Income Tax Act, 1961. 

The rationale behind this exemption is to support and promote the agriculture sector, which plays a vital role in the country's economy. Tax-free agricultural income encourages farmers to invest in their farms and improve agricultural methods.

Tax-free income is the most well-known category of tax-free income in India. Under Section 10(1) of the Income Tax Act, 1961, there is no tax on income derived from agricultural activities. 

This exemption is given with the aim of supporting and encouraging the agricultural sector, which is an important part of the Indian economy. Tax-free agricultural income motivates farmers to invest in their land and improve agricultural practices.

Gifts and Heritage-

In India, most gifts received by individuals are tax-free if they meet certain conditions under Section 56(2) of the Income Tax Act. Similarly, inherited property is also exempt from income tax. 

This exemption is given to ensure financial support within families and to ensure the transfer of wealth from generation to generation.

Interest on PPF and EPF-

Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund is tax-free. These investments are encouraged as they promote long-term savings and financial security for individuals. The government encourages citizens to contribute to these plans by providing tax exemption on the interest earned.

Profit on long term investment-

Long-term capital gains (LTCG) from the sale of certain assets such as equity shares and mutual funds are tax-free if they meet certain criteria. 

The government aims to encourage long-term investments in the capital market by providing this exemption. However, short-term capital gains are taxable.

Long-term capital gain (LTCG) from the sale of certain assets such as equity shares and mutual funds is tax-free if certain conditions are met. 

The government's aim through this exemption is to promote long-term investment in the capital market. However, if these assets are sold in a short period of time and a profit is made, then tax has to be paid on that short-term capital gain (STCG).