Loading...

⚠ ✕
❮ Top
☎ Help
☰
GST ▸
Central GST ▸
Integrated GST + ▸
UTGST / SGST ▸
GST Case Laws + ▸
Income Tax ▸
Income Tax ▸
Allied (Direct Tax) ▸
Income Tax Case Laws ▸
DTAA ▸
International Taxation ▸
Customs ▸
Customs Act / Rules ▸
Notifications / Forms ▸
Circulars / Tariff ▸
Case Laws / Manual ▸
FTP/SEZ ▸
Foreign Trade ▸
Notifications / Circulars / Appendix / Forms ▸
Special Economic Zone (SEZ) ▸
Corp. Law ▸
Company Laws ▸
Standards / Trusts ▸
Partnership / LLP / Societies ▸
Case Laws ▸
FEMA ▸
FEMA / FCRA ▸
Notifications / Circulars ▸
Manual / FAQ ▸
FEMA Case Laws ▸
SEBI / IBC ▸
SEBI ▸
SEBI Case Laws ▸
IBC ▸
IBC - Case Laws ▸
PMLA ▸
Benami Property ▸
Black Money ▸
Money Laundering ▸
Vivad ▸
Direct Tax ▸
Indirect Taxes ▸
Indian Laws ▸
Indian Laws ▸
Bharatiya Nyaya 2023 ▸
Finance Acts & Bills / Amendment Acts ▸
Case Laws ▸
Labour Laws ▸
Labour Code ▸
Old / Others ▸
Central Excise ▸
Central Excise - Cases ▸
Wealth Tax ▸
Service Tax ▸
Service Tax Cases ▸
CST / DVAT ▸
CST / VAT / Sales Tax ▸
×

By creating an account you can:

Logo TaxTMI
Keyword Search :
AI Tools : New
Ask tax questions in natural language. Powered by AI trained on the TaxTMI legal database. Use AI Tools ➞
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
    6. Text Search
  6. The system will try to fetch results that contains ALL your words.
  7. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
    8. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 Filters / Advanced Search ❯
TEXT

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws---- ❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Manuals Income Tax
    Suppose Mr. has paid premium of 25,000 for policy A taken on 30th June 2011 (sum assured 2,00,000) a...
    Manuals Income Tax
    I and my wife both paid for education of our one child. My wife paid 70,000 and I paid 1,60,000 can ...
    Manuals Income Tax
    Can I claim deduction u/s 80C of Income tax Act, 1961 for my adopted child’s school fees?
    Manuals Income Tax
    What are the inclusions and exclusions in Tuition Fees?
    Manuals Income Tax
    Example illustrating the Rule of Residence for an Individual for the Assessment year 2015-16
    Manuals Income Tax
    Example:-During the previous year ending 31st March, 2013, X, a salaried employee received ₹ 1...
    Manuals Income Tax
    Example:-The employer sells the following assets to the employees on 1st January 2015. Car to Z for...
    Manuals Income Tax
    Example:-. On 15th October 2014, the company gives its music system to Y for domestic use. Ownershi...
    Manuals Income Tax
    Example:-X owns car (1400cc). He uses it partly for official purposes and partly for private purpose...
    Manuals Income Tax
    Example:-X is employed by a company. He has been provided a car (1200cc) owned by employer, cost of ...
    Manuals Income Tax
    Example:- X, a director-employee of a private sector company based at Indore (population: 24Lakhs),...
    Manuals Income Tax
    Example:-X, an employee of ABC Ltd., posted at Ajmer (population: 18 Lakh), draws ₹ 3,00,000 a...
    Manuals Income Tax
    Example:-X has received following amount during the previous year. Basic Salary 7,000 p.m.; Dearness...
    Manuals Income Tax
    Example:-Mr. X received voluntary retirement compensation of ₹ 7,00,000 after 30 years 4 month...
    Manuals Income Tax
    Example:-Mr. X received retrenchment compensation of ₹ 10,00,000 after 30 years 4 months of se...
    Manuals Income Tax
    Example:-Mr. X retired from ABC Ltd. on 11th March 2014 after serving for 30 years and 11 months and...
    Manuals Income Tax
    Example:-X retires from B Ltd. on 31st July, 2014. He gets pension of ₹ 1,000 per month up to ...
    Manuals Income Tax
    Example:-An employee of X Ltd. retires on 10th March, 2015 after service of 26 years and receives &#...
    Manuals Income Tax
    Example:-X, an employee of A Ltd., receives ₹ 62,000 as gratuity (he is covered under the Paym...
    Manuals Income Tax
    Example:- X, an employee of Central Govt., receives 9,20,000 as gratuity at the time of his retirem...
❮
❯
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

Open Link
Notes
All › Income Tax
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
Manuals Income Tax
Suppose Mr. has paid premium of 25,000 for policy A taken on 30th June 2011 (sum assured 2,00,000) a...
Show AI Summary
Deduction under 80C: eligible life insurance premiums allowed up to policy ceilings; excess disallowed; one policy's maturity taxable.
Deduction under Section 80C allows life insurance premiums up to policy wise ceilings based on a percentage of the sum assured. Policy A (sum assured 200,000) with a ceiling of 20% permits the full 25,000 premium as deductible; Policy B (sum assured 100,000) with a ceiling of 10% permits only 10,000 of the 12,000 premium as deductible. The total deduction equals the aggregate of eligible premiums, and Policy B's maturity proceeds are not exempt from tax.
Manuals Income Tax
I and my wife both paid for education of our one child. My wife paid 70,000 and I paid 1,60,000 can ...
Show AI Summary
Deduction under 80C: spouses can separately claim education-related deductions based on their individual contributions and limits.
Spouses who each make genuine payments toward a child's education may separately claim a deduction under deduction u/s 80C based on their respective contributions, with each spouse's claim limited by the statutory individual ceiling; the wife may claim her actual payment and the husband may claim up to the maximum permissible individual deduction.
Manuals Income Tax
Can I claim deduction u/s 80C of Income tax Act, 1961 for my adopted child’s school fees?
Show AI Summary
Deduction under section 80C for adopted child's school fees permitted where the statute is silent on biological status.
Because 80C does not specify that the child must be biological, deductions for school fees paid for an adopted child are treated as permissible under the provision; the operative legal point is the statute's silence regarding the child's biological status.
Manuals Income Tax
What are the inclusions and exclusions in Tuition Fees?
Show AI Summary
Tuition fee deduction under 80C covers institutional tuition but excludes transport, hostel, library and private tuition charges.
Deduction under Section 80C allows tuition fee claims only for amounts paid to recognised educational institutions, including pre nursery, play school and nursery class fees; excluded are transport, hostel, mess, library and vehicle stand charges, late fees, part time and distance learning course fees, and private tuition.
Manuals Income Tax
Example illustrating the Rule of Residence for an Individual for the Assessment year 2015-16
Show AI Summary
Residence test for individuals sets presence and prior year stay thresholds determining resident status for income tax assessment.
Rule of residence for individuals for the assessment year 2015-16 uses presence-based thresholds and cumulative prior year conditions to determine resident in India status. Individuals are classified by category-those leaving for employment, visitors who are citizens or persons of Indian origin, and all other individuals-with each category subject to the single year presence test and, where applicable, an additional short term presence requirement plus multi year aggregation criteria assessing residence across preceding years.
Manuals Income Tax
Example:-During the previous year ending 31st March, 2013, X, a salaried employee received ₹ 1...
Show AI Summary
Relief under Section 89(1): compare tax on receipt and accrual bases to determine relief for salary arrears and adjust current tax payable.
Relief for salary received in arrears or advance is determined by computing tax on the aggregate income on the receipt basis and comparing it with tax computed as if the income had been charged to the earlier year(s); the relief equals the difference. The example aggregates salary and arrears, applies standard and specified deductions, computes net income and tax for the years on receipt and accrual bases, and derives the relief amount which is then deducted from current year tax payable.
Manuals Income Tax
Example:-The employer sells the following assets to the employees on 1st January 2015. Car to Z for...
Show AI Summary
Perquisite valuation: employer sale of movable assets to employees taxed as written down value less sale consideration.
Taxable perquisite on employer sale of movable assets to employees is the difference between the employer's written down value (after applying depreciation to cost to reach the balance on the relevant date) and the sale consideration; the document demonstrates this by computing successive depreciated written down values for a car, computer and fridge and subtracting the sale prices to determine the perquisite amounts.
Manuals Income Tax
Example:-. On 15th October 2014, the company gives its music system to Y for domestic use. Ownershi...
Show AI Summary
Use of movable assets perquisite taxed at prescribed annual percentage with pro rata computation for period of employer-provided use.
Use of moveable assets provided by an employer is a taxable perquisite valued by applying a prescribed annual percentage of the asset's cost, with a pro rata adjustment for the actual days of employee use within the year (annual percentage of cost x days of use/365).
Manuals Income Tax
Example:-X owns car (1400cc). He uses it partly for official purposes and partly for private purpose...
Show AI Summary
Perquisite valuation for motor car under Rule 3(2): employer reimbursements reduced by official-use deduction, affecting taxable perquisite.
Valuation of a motor car perquisite requires deducting the official-use portion from employer reimbursements before treating the balance as a taxable perquisite; absent a log book a fixed deduction method is applied, while contemporaneous usage evidence permits apportionment of the reimbursement by the documented official-use percentage.
Manuals Income Tax
Example:-X is employed by a company. He has been provided a car (1200cc) owned by employer, cost of ...
Show AI Summary
Perquisite valuation of employer provided motor car treats engine capacity, driver cost, recoveries and private use depreciation.
Perquisite valuation for employer provided motor cars uses a fixed monthly valuation for car and driver where engine capacity falls below the higher threshold; recoveries from the employee do not reduce that fixed valuation. If the vehicle is used exclusively for private purposes, the taxable perquisite is calculated as annual depreciation plus petrol, driver and maintenance costs, minus any amount recovered from the employee.
Manuals Income Tax
Example:- X, a director-employee of a private sector company based at Indore (population: 24Lakhs),...
Show AI Summary
Rent-free accommodation valuation: taxable value is the lower of a percentage of salary or employer-paid rent for perquisite computation.
Taxable value of a rent-free accommodation perquisite is the lower of (a) 15% of salary (computed as basic salary plus DA plus commission) and (b) employer paid annual rent. In the example the aggregated annual basic, DA and commission are used to calculate the 15% benchmark, which is then compared with the annual lease rent to determine the taxable perquisite.
Manuals Income Tax
Example:-X, an employee of ABC Ltd., posted at Ajmer (population: 18 Lakh), draws ₹ 3,00,000 a...
Show AI Summary
Taxable value of rent-free accommodation set at a percentage of salary when city population exceeds threshold.
Taxable perquisite for rent free accommodation is computed by applying the population based percentage to Salary, defined to include Basic, DA (forming part of salary) and Commission; the taxable value equals the prescribed percentage of that aggregated salary.
Manuals Income Tax
Example:-X has received following amount during the previous year. Basic Salary 7,000 p.m.; Dearness...
Show AI Summary
House Rent Allowance exemption under section 10(13A) requires choosing the minimum of three salary-based tests to determine taxable HRA.
The exemption under section 10(13A) and Rule 2A is the minimum of actual HRA received, rent paid in excess of ten percent of salary, and the prescribed percentage of salary. In the example actual HRA is 36,000; excess rent over ten percent of salary is 26,400; forty percent of salary is 38,400. The exempt amount is therefore 26,400 and the remaining 9,600 is included in gross salary.
Manuals Income Tax
Example:-Mr. X received voluntary retirement compensation of ₹ 7,00,000 after 30 years 4 month...
Show AI Summary
Voluntary retirement compensation tax treatment: exemption limited by statutory ceiling formulas; excess is treated as taxable salary.
Computation of taxability of voluntary retirement compensation is governed by a statutory exemption limited by prescribed ceiling formulas and the principle that the exempt amount is the lesser of specified sums. In the example, compensation received of 700,000 gives an exempt amount of 500,000 under the statutory ceiling, leaving 200,000 as taxable salary under the governing exemption provision and associated rules.
Manuals Income Tax
Example:-Mr. X received retrenchment compensation of ₹ 10,00,000 after 30 years 4 months of se...
Show AI Summary
Retrenchment compensation exemption under Sec. 10(10B): apply least-of-three test for calculating taxable retrenchment; excess taxable.
Computation of retrenchment compensation exemption under Sec. 10(10B): compute the three comparator sums using the employee's service length and salary components, take the least of those sums as exempt. In the example the exempt amount is Rs. 4,32,692 and the remaining Rs. 5,67,308 of the retrenchment payment is taxable.
Manuals Income Tax
Example:-Mr. X retired from ABC Ltd. on 11th March 2014 after serving for 30 years and 11 months and...
Show AI Summary
Leave salary exemption under section 10(10AA) limited by average salary and statutory caps, yielding the lowest applicable ceiling.
Computation of leave salary exemption under section 10(10AA) requires determining average salary by annualising ten months' basic pay plus the proportion of dearness allowance included for retirement benefits and dividing by ten. Unavailed leave months equal total entitlement minus leaves taken and leaves earlier encashed. The exempt leave salary is the least of (unavailed months x average salary), (ten months' average salary), and the statutory ceilings; the example selects the lowest applicable ceiling as exempt.
Manuals Income Tax
Example:-X retires from B Ltd. on 31st July, 2014. He gets pension of ₹ 1,000 per month up to ...
Show AI Summary
Commuted pension tax treatment: part exempt, part taxable; exemption reduced where gratuity is received.
Uncommuted pension is fully taxable as salary; commuted pension is partly exempt and partly taxable. Compute a notional full pension value from the commuted payment and apply an exemption fraction: if no gratuity is received, one half of the notional full pension value is exempt; if gratuity is received, one third is exempt. The remainder of the commuted payment is chargeable to tax as salary and must be added to taxable uncommuted pension to determine total taxable pension income.
Manuals Income Tax
Example:-An employee of X Ltd. retires on 10th March, 2015 after service of 26 years and receives &#...
Show AI Summary
Gratuity exemption: least of three test determines exempt portion for noncovered employers; excess gratuity is taxable.
Gratuity from a noncovered employer is exempt to the extent of the least of three amounts: the service based fraction computed from the average monthly salary (which includes basic pay, one month's dearness allowance, and average monthly commission), the statutory monetary ceiling, and the gratuity actually received; any excess over that exempt amount is taxable.
Manuals Income Tax
Example:-X, an employee of A Ltd., receives ₹ 62,000 as gratuity (he is covered under the Paym...
Show AI Summary
Gratuity exemption: part determined by 15 days salary times completed years, excess treated as taxable salary.
Gratuity exemption is determined by taking the least of: the product of 15 days' salary and completed years of service, the statutory ceiling, and the gratuity received. Completed years may be rounded to include qualifying months. The exempt portion is that least amount; any excess over the exempt amount is taxable as salary income in the assessment year.
Manuals Income Tax
Example:- X, an employee of Central Govt., receives 9,20,000 as gratuity at the time of his retirem...
Show AI Summary
Gratuity exemption under Section 10(10)(i) remains available even if retiree accepts private sector employment after retirement.
Gratuity paid to a government employee on retirement is fully exempt from income tax under the governing gratuity exemption provision, and that exemption remains available even if the retiree subsequently accepts employment in the private sector.

TMI Notes

All › Income Tax
Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Home › TMI Notes › Income Tax › Act-Rules › Category › This
Back

All TMI Notes

Income Tax

Comparison of SCHEDULE II "INCOME NOT TO BE INCLUDED IN TOTAL INCOME" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

17 September, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

Print Options

SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Income-tax Act, 2025

At a Glance

SCHEDULE II sets out classes of income that are excluded from "total income" for income-tax purposes. The Bill (Old Version) and the enacted Act differ in several material respects affecting life-insurance exclusions, pension/NPS entries, references to International Financial Services Centre (IFSC) entities, and the inclusion of equalisation-levy income. Affected parties include policyholders, insurers, employers, employees, pension subscribers, IFSC entities and tax authorities. Effective dates are stated within specific entries (for example, policy issue periods and 1 April 2002/2023) where provided; no single overarching commencement date for the Schedule is stated in the Bill text.

Background & Scope

Statutory hook: SCHEDULE II (See section 11) - "Income not to be included in total income." The Schedule lists categories of exempt income (column B) subject to conditions (column C). Definitions and notes at the end assign meanings to terms used in the table. The Bill (Old Version) is the source document for this commentary. Any differences vis-`a-vis the enacted Act are identified only insofar as both texts were provided; where a detail is absent in the Bill text, the phrase "Not stated in the document." has been used.

Statutory Provision Mode

Text & Scope

The Schedule enumerates 16 heads of income excluded from total income, including: agricultural income; sums under life-insurance policies (with sub-conditions tied to period of issue, premium-to-sum-assured ratios and aggregate premium ceilings); provident fund and recognised provident fund payments (with carve-outs for interest on large contributions on/after 1 April 2021); payments under Sukanya Samriddhi, National Pension System (NPS) Trust, Agniveer Corpus Fund, approved superannuation funds; scholarships; awards/rewards instituted or approved by government; interest or other receipts on specified government securities and deposits; interest on gold bonds/certificates; interest on bonds issued by local authorities or State Pooled Finance Entities; income on transfer of certain UTI units; income chargeable to equalisation levy (new insertion); and specific categories u/s 10(15) and related provisions of the 1961 Act as applicable.

Interpretation

The text frames exclusions as conditional: each head is subject to prescribed conditions and definitions in accompanying notes. Legislative intent, as discernible from the Bill text, is to preserve traditional exemptions (agriculture, certain pensions, scholarships, specified government securities) while tightening or clarifying tax-exempt treatment for life-insurance receipts and retirement/savings vehicles by reference to issue dates, premium ratios, aggregate premium ceilings and contribution thresholds. The insertion of equalisation-levy related exclusion (Sl. No. 15) signals explicit recognition of overlap between equalisation-levy chargeability and income-tax neutrality for certain cross-border digital services.

Exceptions/Provisos

Key carve-outs and conditions provided in the Bill include:

  • Life-insurance sums excluded only if policies meet period-specific premium-to-sum-assured ratios and, for certain periods, aggregate premium ceilings (Rs. 2,50,000 or Rs. 5,00,000) - and certain sums (section 127 receipts; Keyman policies) are expressly ineligible.
  • Portions of interest on provident fund/recognised provident fund balances attributable to contributions on/after 1 April 2021 are not eligible for exclusion where contributions exceed specified thresholds (Rs.5,00,000 / Rs.2,50,000) and the amount not excluded is to be computed as prescribed.
  • NPS payments excluded only to the extent they do not exceed 60% of the total amount payable on closure/opt-out.
  • Approved superannuation fund payments are exempt only in specified circumstances (death, commutation at retirement/age, refund in limited cases, transfer to specified pension schemes).
  • Equalisation-levy related incomes are excluded only where not chargeable as royalty/FTS in India under agreements notified u/s 159 (explicit exception in Sl. No. 15).

Illustrations

  • Example 1: A unit-linked life policy issued on 1 Oct 2023 with annual premium such that premium-to-sum-assured ratio is 12% and aggregate premium per tax year is Rs.2,00,000 - the Bill permits exclusion if it meets the Item 2 conditions (unit-linked post-1-April-2023: ratio <=15% for special, <=10% for others; aggregate <=Rs.2,50,000 for ULIP). Whether treated as "special policy" depends on disability/disease status u/rs - Not stated in the document.
  • Example 2: An employee receives accumulated recognised provident fund balance including interest attributable to contributions of Rs.6,00,000 made on/after 1 April 2021 in a year when no employer contribution was made - interest attributable to that contribution is not eligible for exclusion (threshold exceeded Rs.5,00,000); the portion not excluded to be computed as prescribed (procedure Not stated in the document).

Interplay

The Bill references other statutory instruments and provisions: Section 11 (hook), Section 127 (for life-insurance ineligibility), Schedule XI para 8, Schedule XV (definition of "actual capital sum assured"), Insurance Regulatory regulations, the Provident Funds Act, Government Savings Promotion Act (Sukanya Samriddhi), Dept. notifications regarding NPS (notifications not reproduced in the Bill text), Finance Act, 2016 (equalisation levy Chapter VIII) and section 159 agreements. The Bill contemplates Board guidelines for removal of difficulties. Where computation methods are required ("as prescribed"), the Bill defers to rules/regulations; these procedural details are Not stated in the document.

Differences between the Bill (Old Version) and the Enacted Act - Practical Impact

Topic Bill (Old Version) Act (2025) - Differences & Practical Impact
Reference to IFSC in life-insurance entry Exclusion clause expressly excludes policies issued by "International Financial Services Centre insurance intermediary office" from the general test; IFSC office language appears within clause (a).

The Act broadens IFSC coverage differently (references to "International Financial Services Centre Insurance Office") and later adds a special carve-out that aggregate premium conditions do not apply to policies issued on or after 1 April 2025 by the IFSC Insurance Office.

Practical impact: IFSC-issued policies post-1-Apr-2025 enjoy relaxed aggregate-premium limits under the Act versus the Bill - this benefits IFSC policyholders and insurers.
Section reference for ineligible insurance sums Ineligibility lists section 127 (no subsection reference) and Keyman policies.

The Act specifies "section 127(4)" as ineligible; this narrows or clarifies which portion of section 127 is meant.

Practical impact: narrower/clearer exclusion scope for section 127 receipts, reducing interpretive ambiguity.
Aggregate premium thresholds for policies issued on/after 1-Apr-2023 ULIPs: aggregate <=Rs.2,50,000; other policies: aggregate <=Rs.5,00,000.

The Act restates these ceilings but then adds the IFSC carve-out for policies issued on/after 1-Apr-2025.

Practical impact: domestic policyholders unchanged, IFSC policyholders gain advantage.
NPS-related entries (Sl. Nos. 15 & 16) The Bill lacks specific entries for "lump sum amount" defined by a particular notification and for Unified Pension Scheme subscriber-specific references.

The Act adds two discrete entries (Sl. Nos. 15 and 16) dealing with NPS payments to Unified Pension Scheme subscribers and "lump sum amount" per a departmental notification dated 24 Jan 2025.

Practical impact: greater specificity and targeted exemption for Unified Pension Scheme subscribers under NPS, linking to a concrete notification (FX-1/3/2024-PR). This reduces uncertainty for affected NPS subscribers.
Equalisation levy income Bill includes Sl. No. 15 addressing income chargeable to equalisation levy.

The Act omits the Bill's Sl. No. 15 equalisation-levy entry or shifts numbering; comparison shows the Act instead includes other NPS-related items.

Practical impact: the treatment of equalisation-levy incomes requires reconciliation between Act text and prior Bill; taxpayers relying on the Bill's exclusion must verify the final Act wording (Not stated in the document).

Practical Implications

  • Compliance and risk areas: Life-insurance exclusions carry detailed temporal and quantitative conditions (period of issue, premium-to-sum-assured ratio, aggregate premium ceilings). Insurers and policyholders must verify issue date classifications and compute premium ratios and aggregate premiums across the policy term. The explicit ineligibility for keyman policies and section 127 receipts increases scrutiny over policy ownership and assignment.
  • NPS and provident fund entries impose record-keeping obligations: authorities and subscribers must track contributions made on or after 1 April 2021 separately, and identify portions of interest attributable to contributions exceeding thresholds. The method of computing the amount not excluded is left to prescribed rules - until rules are notified, potential uncertainty persists.
  • Equalisation-levy clause (Sl. No. 15): taxpayers and digital service providers should reconcile equalisation-levy exposure and Income-tax chargeability; the clause excludes income chargeable to equalisation levy except where the income is otherwise taxable in India as royalty/FTS under notified agreements (thus creating an interplay with tax treaty determinations and notifications u/s 159).
  • IFSC references: the Bill treats certain IFSC insurance intermediary office receipts differently in the life-insurance entry (exclusion/inclusion language differs versus the Act). Parties operating within IFSCs should note the special treatment and any administrative guidance forthcoming.
  • Procedural uncertainty: multiple entries defer to "as prescribed" computations and to notifications by the Central Government; until those are issued, taxpayers face interpretation and compliance risk. The Board's power to issue binding guidelines (with Central Government approval) is preserved, indicating administrative rule-making will shape practical application.

Key Takeaways

  • The Bill retains traditional exemptions (agriculture, scholarships, certain pension/retirement receipts) while imposing quantified tests on insurance exclusions (period-specific ratios and aggregate premium ceilings).
  • Interest on provident fund balances attributable to large post-1-April-2021 contributions is explicitly excluded from exemption, with thresholds (Rs.5,00,000 / Rs.2,50,000) and prescribed computation methods.
  • Equalisation-levy related income is newly addressed - excluded except where taxable in India as royalty/FTS under notified agreements.
  • Certain specific sums are expressly excluded from insurance exemption (section 127 receipts; Keyman insurance), tightening the prior broader language.
  • Several entries defer key operational questions to rules/notifications; substantial administrative guidance is required to operationalise the Schedule.

Full Text:

SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Topics

Acts Income Tax
Next ➔