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At present, the season of filing Income Tax Return (ITR) is in full swing in the country. The last date for filing tax returns for the financial year 31st July 2026 is very close. If you haven’t started your paperwork yet, don’t delay. During the tax season, this question often arises in the minds of employees and common people that is there any such income in India on which the government does not charge even a single rupee of tax?
The answer is – yes! Under the Indian Income Tax Act, there are 8 such incomes, which come under completely tax free income category. For in-depth information on this topic, we have had a special conversation with tax expert CA Raja Mangala, who has explained these eight tax-free sources in detail.
1. Income from farming (Agricultural Income)
India is an agricultural country, hence the entire income earned from agricultural land is kept out of the scope of income tax. This includes the sale of crops grown through farming, horticulture or rent received from agricultural land. However, CA Raja Mangla points out a necessary condition that if your agricultural income is more than Rs 5,000 and your other commercial income is above the tax exemption limit, then it can be partially included while calculating the total tax rate.
2. Gifts received from weddings and relatives
There is no tax to be paid on gifts of cash, jewelery or property received from relatives or close relatives on wedding, birthday or other special occasions. But keep in mind, if the total value of all gifts received from non-relatives (like friends or acquaintances) in a financial year exceeds Rs 50,000, then the entire amount will be taxed as per your tax slab.
3. Life Insurance (LIC) Maturity and Death Claim
Under Section 10(10D) of the Income Tax Act, the amount received on maturity of a life insurance policy is completely tax free. However, under the recent rules, the government has introduced new tax rules on very high premium policies and some ULIPs, but in case of any untoward incident, the death claim amount received by the nominee is always 100% tax free, irrespective of the amount of premium.
4. PPF and EPF funds
Public Provident Fund i.e. PPF is a means of investment which comes in the ‘Exempt-Exempt-Exempt’ (EEE) category. This means that the amount invested, the annual interest received on it and the entire amount received at the time of maturity is completely tax free. On the other hand, if you withdraw money from Employees Provident Fund (EPF) after completing 5 continuous years of service, then it also remains out of the tax net.
5. Commuted Pension (Pension received in lump sum)
Not all regular pensions received after retirement are tax free (they are taxable under the salary head). But if a government employee has received a lump sum share of commuted pension at the time of retirement, then it is completely exempted from tax. Private sector employees also get partial exemption on this, which depends on the calculation of their gratuity.
6. All kinds of scholarships and government awards
There is no tax on any kind of scholarship received by students for studying in the country or abroad. The government has kept it completely free from taxable income. Apart from this, no tax is deducted on gallantry awards received in the army or civil defence, national awards received from the government and financial assistance received from the Prime Minister or Chief Minister Relief Fund.
7. Gratuity Benefit
If you are a central or state government employee and you receive gratuity on retirement or change of job, then it is completely tax free. This is also a big relief for private sector employees. The maximum limit of tax-free gratuity for private employees has been fixed at Rs 20 lakh. That is, if your gratuity is up to Rs 20 lakh then no tax will be charged, tax will have to be paid on the amount above this.
8. CA’s final advice: Fill ITR on time
CA Raja Mangla says that even if your earnings fall in these tax free categories, but if your gross total income exceeds the basic exemption limit, then you must file your ITR before July 31, 2026. It is legally correct and safe to declare tax free income in the ‘Exempt Income’ column of ITR.