Section 10(15) Income Tax Act | Interest Exempt from Tax |

Section 10(15) of Income Tax Act exempts certain Interest Incomes. There are total 17 clauses in Section 10(15) exempting various types of income from Interest. The interest income from the following securities enumerated specifically at clause 15 of Section 10 of the Income-tax Act is exempted. Hence, the interest thereon shall not be included in the income of the assessee.

Redemption Premium : Section 10(15) Income Tax Act

Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification.

Investment Bonds : Section 10(15) Income Tax Act

In the case of an individual or a Hindu Undivided family, interest on such Capital Investment Bonds as the Central Government may, by notification in the Official Gazette, specify. (No bonds will be notified by the Central Govt. on or before June 1, 2002)

In the case of an individual or a Hindu Undivided family, interest on the notified Relief Bonds

Gift Bonds : Section 10(15) Income Tax Act

In the case of :

(a) a non-resident Indian, being an individual owning the bonds; or

(b) a nominee or survivor of the non-resident Indian; or

(c) the donee, being an individual,

to whom the bonds have been gifted by the non-resident Indian, the interest received thereon shall be exempt if the bonds are purchased by the non-resident Indian, in foreign exchange and the interest and principal received thereon, whether on maturity or otherwise, is not allowed to be taken out of India. The benefit does not cease even if the non-resident Indian subsequently acquires the status of a resident. But, in the event of premature encashment thereof, the benefit shall cease from the previous year in which the encashment is made.

Ceylon CB : Section 10(15) Income Tax Act

Interest on securities held by the Issue Department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949.

Bank Outside India : Section 10(15) Income Tax Act

Interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country or any deposits made by it, with the approval of the RBI, with any scheduled bank.

Local Authority : Section 10(15) Income Tax Act

Interest payable by Government or a local authority on moneys borrowed by it before June 1,2001 from or debts owed by it to sources outside India.

Loan before 2001 : Section 10(15) Income Tax Act

Interest payable by an industrial undertaking in India on moneys borrowed by it before June 1, 2001 under a loan agreement entered into with such financial institution in a foreign country as may be approved in this behalf by the Central Government by general or special order.

Raw Materials Purchase : Section 10(15) Income Tax Act

Interest payable by an industrial undertaking in India on any moneys borrowed or debt incurred by it before June 1, 2001 in a foreign country in respect of purchase outside India of raw materials or components or capital plant and machinery to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf having regard to terms of the loan or debt and its repayment. Purchase, includes Hire Purchase Agreement or a lease agreement with an option to purchase such plant and machinery

IFC : Section 10(15) Income Tax Act

Interest payable by the Industrial Finance Corporation of India or the IDBI or the Industrial Credit and Investment Corporation of India or Export-Import Bank of India, or the National Housing Bank or the Small Industries Development Bank of India on any moneys borrowed before June 1, 2001 from sources outside India.

Financial Institutions : Section 10(15) Income Tax Act

Interest payable by any other financial institutions established in India or a banking company on any moneys borrowed before June 1, 2001 from sources outside India under an approved loan agreement.

Foreign Currency : Section 10(15) Income Tax Act

Interest at the rate approved by the Central Govt. payable by an industrial undertaking in India on any moneys borrowed by it in foreign currency from sources outside India under an approved loan agreement.

NRI : Section 10(15) Income Tax Act

Interest payable by a scheduled bank to a non-resident or a person not ordinarily resident on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the Reserve Bank of India.

LTFC : Section 10(15) Income Tax Act

Interest payable by a public company formed and registered in India, and eligible for deduction under Section 36(1)(viii) with the main objective of carrying on business of providing long term finance for construction or purchase of houses in India for residential purposes on any moneys borrowed by it in foreign currency from sources outside India under an approved loan agreement before the 1st day of June, 2003, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government.

Bonds & Debentures : Section 10(15) Income Tax Act

Interest payable by public sector companies on certain specified bonds and debentures subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as may be specified by the Central Government by notification in the Official Gazette.

Deposits : Section 10(15) Income Tax Act

Interest payable by Government on deposits made by an employee of the Central or State Government, or a public sector company out of moneys due to him on account of his retirement, whether on superannuation or otherwise. To be eligible for exemption, the deposit must have been made by the employee in accordance with a scheme notified by the Central Government.

Specified Securities : Section 10(15) Income Tax Act

Interest on securities held by the Registrar, Supreme Court, in Reserve Bank’s SGL Account No. SL/DHO48.

Updated: October 15, 2017 — 6:05 am

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