Incomes Not Forming Part of Total Income

Receipts by a member from a Hindu Undivided Family — Section 10(2)

Any sum received by an individual, in his or her capacity as a member of a Hindu Undivided Family, out of the income of the family (or, in the case of an impartible estate, out of income of the family estate) is NOT included in that individual's Total Income. The reason is straightforward: the income has already been taxed once, in the hands of the HUF itself, as a separate assessee under Section 2(31). Taxing the same rupee again when it is shared out among the members would amount to double taxation of one income.

Share of profit from a partnership firm — Section 10(2A)

A partner's share in the total income of a firm (this extends to an LLP as well) is exempt in the hands of the partner. Exactly as with the HUF receipt above, the firm has already paid tax on its total income before any profit is distributed among the partners, so taxing the same profit again in each partner's hands would double-tax it.

Sums received under a Life Insurance Policy — Section 10(10D)

Any sum received under a life insurance policy — including any bonus allocated on the policy — is generally exempt in the hands of the person who receives it (the policyholder on maturity, or the nominee on the death of the insured). This exemption is SUBJECT to conditions laid down in the section itself, relating among other things to the relationship between the premium paid and the sum assured, and to policies covering persons with a disability or specified disease. This chapter deliberately does not quote those numeric conditions (see the AY-grounding note in Section A) — the section reference and the general principle are the syllabus-fixed facts to know at this stage.

Daily allowance of Members of Parliament and Members of the Legislative Assembly — Section 10(17)

Any daily allowance received by a Member of Parliament, or by a Member of a State Legislature or its Legislative Council, is wholly exempt from tax. The rationale is that this allowance is meant to cover the member's expenses while attending sittings, not to represent taxable personal income.

Awards — Section 10(17A)

Any payment made, whether in cash or in kind, as an award instituted by the Central Government or a State Government (or by any other body approved by the Central Government) in the public interest, is exempt from tax. A purely private or promotional prize — for example, a marketing contest run by a company — does NOT qualify for this exemption merely because it is called an "award"; the source and public-interest character of the award matter.

Income of a Local Authority — Section 10(20) …