While submitting your Income Tax returns you need not include the following incomes since they are are tax free in India.
1 Agriculture Income
Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed. Agriculture operation includes processing & sale of agricultural crops from agriculture land. Even rent received from agriculture land is not taxable.
2. Dividend Income
Any dividend received by investment in stocks or mutual funds is tax free in the hands of investors.
3. Saving Bank Interest incomeThe interest earned on Savings Bank accounts up to a limit of Rs. 10,000/- is exempt from inclusion in Gross Total Income for the purpose of Income Tax.
4. Income for being partner in firm
If you received any income for being partner of firm which has already been assessed, than this income share does not required inclusion for calculation of tax. This is called as profit sharing as per partnership deed.
5. Travel Concession or Assistance
Money received from employer as LTA for the purpose of travel to any place in India along with family for the purpose of leave is exempted from tax.
The amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel. This claim can be made two times in bunch of 4 years.
6. Money received as Gift
If you receive gift amount less than 50,000 Rs/- from anyone it will be considered as tax free amount.
Another good thing is gifts received from specified relatives are exempt from Income Tax, and there is no upper limit also.
7. Rent Received
Any allowance received by employer to an employee to meet expenditure actually incurred on the payment of rent for accommodation is tax free. This is called as HRA this amount is taxable if house is owned by the employee or he has not incurred the rental.
8. Income from Long term Capital Gain
Any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund are tax free in nature. These transactions are subject to securities transaction tax.
9. Income from Life insurance policyMaturity amount received as benefit from a life insurance policy, including bonus payment, is tax free.
10. Income from government securities
Any earnings from interest, premium on redemption or other payment on securities, bonds, annuity certificates, savings certificates and other instruments issued by the central government is tax free.
11. Scholarship money
Scholarships granted to meet the cost of education is tax free in nature.
12. Awards and RewardsAll payments receive in cash or kind as an award given by the central or state governments or by a body recognized by the central government is tax free.
13. Retrenchment
In unfortunate event of company closure compensation received by workman is considered as tax free.
14. Relief funds
Any amounts which are received by an individual as part of the Prime Minister’s National Relief Fund or students fund or foundation for communal harmony will be treated as tax free.
15. Retirement / Gratuity
Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be tax free subject to following limits
For every completed year of service or part thereof, gratuity shall be paid at the rate of fifteen days wages based on the rate of wages last drawn by the concerned employee.
16. Commutation of Pension
In case of employees of Central & State Govt., Local Authority, Defense Services and corporations established under Central or State Acts, the entire commuted value of pension is exempt.
In case of any other employee, if the employee receives gratuity, the commuted value of 1/3 of the pension is exempt, otherwise, the commuted value of ½ of the pension is exempt.
17. Leave Encashment
Any cash amount received as compensation for earned leave which is enchased at the time of retirement is tax free. This is applicable only to employees of central/state government.
In case of other employees, the exemption is to be limited to a maximum of 10 months of leave encashment, based on last 10 months average salary. This is further subject to a limit of Rs. 3,00,000/-.
18. Voluntary Retirement
Payment received by an employee at the time of voluntary retirement, or termination of service is exempt from the tax subject to extent of Rs. 5 Lakh.
But, the company paying the VRS should have a framework for VRS as prescribed by the government.
19. Provident Fund
Any payment received from a Statutory Provident Fund, (i.e. to which the Provident Fund Act, 1925 applies) is tax free.
20. Superannuation
Payment from an Approved Superannuation Fund will be tax free provided the payment is made at retirement, incapacitation or at death of employee.
(Source: http://www.staffcorner.com/view.html?id=195001 )
