Tax Relief 2025: Govt Makes These 5 Incomes Tax-Free

Income Tax Rules 2025: Certain sources of income offer an incredible source of tax exemption. Today we will look at five such sources – specifically income-from-agriculture as an exempt source -that fall under this heading in the Income Tax Act and that are exempt. It states all agriculture-derived income under section 10(1) as being exempt.

Full exemption of income will be met under Section 10(1) of the Income Tax Act where agricultural income has been defined as any earnings derived from cultivation, processing and distribution of products such as wheat, rice, pulses fruits or vegetables. Rent collected on agricultural land that is being actively and reasonably used for agriculture purposes also does not attract income tax – providing additional relief to agriculturists. Furthermore, income derived from selling or purchasing of land would also not count toward this exemption so all forms of agriculture income is treated tax free by law. This completely exempt legal status means agricultural income has to pay taxes under law!

As per section 10 (1) of Income Tax, income derived from agriculture is entirely exempt from taxation, including production, processing and distribution operations related to wheat, rice, pulses and fruit business operations. Furthermore, rent coming from property used specifically for agricultural work would have also been tax-exempt; plus any income derived from purchasing and selling agricultural lands also remains free from any form of taxation!

Gift Received From Relatives

These gifts remain tax-free; however, close relatives include husband and wife; their offspring from these marriages; brothers and sisters; any sibling-in-law, mother/father-in-law/grandchildren in-law as well as all their fun; grandparents with grandchildren as recipients – thus all are encouraged to exchange these presents out of love instead of taxation.

Gifts given on account of marriage are exempt from taxing irrespective of their value; gifts from friends or acquaintances up to Rs 50,000 do not incur tax and any amounts over this threshold will remain non-taxable.

Income From Gratuity

Any gratuity received upon the death or retirement of a government employee is completely tax free; however, for private workers covered under the Gratuity Payment Act 1972 this does not apply if their retirement gratuity exceeds Rs 20 Lakh; these would then become subject to taxation.

Scholarship

All institutions provide tax free scholarships upon course completion for any institution and provide tax free voluntary retirement payments up to Rs 5 lakhs to benefit both students and employees for long term planning of retirement savings accounts and savings accounts.

Some Pensions May Qualify For Tax Exemption as Well

Pension payments received by recipients of gallantry awards such as Mahavir Chakra, Paramvir Chakra or Vir Chakra are exempt from taxes; similarly pension payments received by Indian Armed Force personnel’s family members also remain tax-exempt.