INCOMES WHICH DO NOT FORM PART
OF TOTAL INCOME

10. Incomes not included in total income.

In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

(1) agricultural income ;

(2) subject to the provisions of sub-section (2) of section 64, any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family ;

(2A) in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm.

Explanation.—For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits ;]

(3) [***]

[(4) (i) in the case of a non-resident, any income by way of interest on such securities or bonds as the Central Gov­ernment may, by notification in the Official Gazette, specify in this behalf, including income by way of premium on the redemption of such bonds :

[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such securities or bonds on or after the 1st day of June, 2002;]

[(ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the rules made thereunder :

Provided that such individual is a person resident outside India as defined in clause (q) of section 2 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account ;]]

The following second proviso shall be inserted after the proviso to sub-clause (ii) of clause (4) of section 10 by the Finance (No. 2) Act, 2004, w.e.f. 1-4-2006 :

Provided further that nothing contained in this sub-clause shall apply to any income by way of interest paid or credited on or after the 1st day of April, 2005 to the Non-Resident (External) Account of such individual;

(4B) in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued before the 1st day of June, 2002] by the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf :

Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Regula­tion Act, 1973 (46 of 1973), and any rules made thereunder.

Explanation.—For the purposes of this clause,—

(a) a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India ;

(b) “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder ;]

(5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—

(a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;

(b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or as­sistance granted to the employees of the Central Government :

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—

(i) the spouse and children of the individual ; and

(ii) the parents, brothers and sisters of the individu­al or any of them, wholly or mainly dependent on the individual; ]

(5A) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.]

(5B) [***]

(6) in the case of an individual who is not a citizen of India,—

(i) [***]

(ii) the remuneration received by him as an offi­cial, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of these offi­cials, for service in such capacity :

Provided that the remuneration received by him as trade commis­sioner or other official representative in India of the Govern­ment of a foreign State (not holding office as such in an honor­ary capacity), or as a member of the staff of any of those officials, shall be exempt only if the remuneration of the corre­sponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar pur­poses in the country concerned enjoys a similar exemption in that country :

Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff ;]

(vi) the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled—

(a) the foreign enterprise is not engaged in any trade or business in India ;

(b) his stay in India does not exceed in the aggregate a period of ninety days in such previous year ; and

(c) such remuneration is not liable to be deducted from the income of the employer chargeable under this Act ;

(via) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(vii) [Omitted by the Finance Act, 1993, w.e.f. 1-4-1993;]

(viia) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(viii) any income chargeable under the head “Sal­aries” received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year ;

(ix) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(x) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

[(xi) the remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—

(i) the Government ; or

(ii) any company in which the entire paid-up share capital is held by the Central Government, or any State Govern­ment or Governments, or partly by the Central Government and partly by one or more State Governments ; or

(iii) any company which is a subsidiary of a compa­ny referred to in item (ii) ; or

(iv) any corporation established by or under a Central, State or Provincial Act ; or

(v) any society registered under the Societies Regis­tration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Cen­tral Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments ;]

(6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 [but before the 1st day of June, 2002] and,—

(a) where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy ; and

(b) in any other case, the agreement is approved by the Central Government,

the tax on such income is payable, under the terms of the agree­ment, by Government or the Indian concern to the Central Govern­ment, the tax so paid].

Explanation.—For the purposes of this clause [and clause (6B)],—

(a) “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;

(b) “foreign company” shall have the same meaning as in section 80B ;

(c) “royalty” shall have the same meaning as in Expla­nation 2 to clause (vi) of sub-section (1) of section 9;]

(6B) where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into before the 1st day of June, 2002] by the Central Government with the Government of a foreign State or an international organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved before that date] by the Central Government, the tax so paid ;]