Section 11 Income Tax Act 2025: Which Incomes Are Exempt from Tax?
Section 11 of the Income-tax Act, 2025 identifies income excluded from total income through Schedules II to VI and persons who are not chargeable to tax under Schedule VII, subject to statutory conditions.
What does Section 11 provide?
Section 11 forms part of Chapter III, dealing with incomes which do not form part of total income. It establishes a conditional exclusion: qualifying income listed in Schedules II, III, IV, V and VI is excluded from computation of total income. Schedule VII separately identifies persons whose total income is not chargeable to tax when its conditions are fulfilled.
The exemption is not automatic merely because a receipt or person appears in a Schedule. The precise entry, qualifications, limitations and relevant tax year must be examined.
Section 11 explained subsection by subsection
Section 11(1): Exclusion of specified income
Income enumerated in Schedules II to VI is not included in a person's total income for a tax year, provided the conditions in the relevant Schedule are met. Each applicable Schedule entry must be read in full.
Section 11(2): Failure to meet income-exemption conditions
If the conditions for an income exemption under Schedules II to VI are not satisfied in a tax year, that income becomes chargeable to tax under the Act in computing total income for that tax year.
Section 11(3): Specified persons under Schedule VII
Persons enumerated in Schedule VII are not chargeable to income-tax on their total income for a tax year if the Schedule's conditions are satisfied. This is a person-based exclusion, distinct from the income-based exclusions in subsection (1).
Section 11(4): Failure to meet Schedule VII conditions
If a person specified in Schedule VII does not satisfy the relevant conditions for a tax year, that person's income is chargeable to tax under the applicable provisions of the Act for that year.
Section 11(5): Rules and notifications
The Central Government may make rules or issue notifications for the purposes of Section 11 as specified in Schedules II to VII. Applicable subordinate legislation must therefore be considered along with the Act.
How do Schedules II to VII operate?
Person-based exemptions: Schedule VII identifies specified persons whose total income is not chargeable when its conditions are met.
For an exemption claim, identify the exact Schedule and entry, verify eligibility and any applicable ceiling or condition, and retain records supporting compliance. An entry cannot be treated as a blanket exemption beyond its wording.
Relevant statutory concepts
Tax year: The period defined by Section 3 of the Income-tax Act, 2025 for determining income and tax liability.
Total income: Income computed under the provisions of the Act after applying relevant inclusions, exclusions and deductions.
Person: The category of taxable entities covered by the definition of person in Section 2, including individuals and other specified entities.
Exempt income: In this context, income excluded from total income only to the extent and subject to the conditions provided by Section 11 and the relevant Schedule.
Chargeable to tax: Income or a person's total income falling within the Act's charging and computation provisions, subject to applicable rates and other provisions.
Practical illustrations
Example 1: Conditions satisfied
Where a receipt falls within an entry of Schedule II to VI and every applicable condition is satisfied, the qualifying income is excluded from total income under Section 11(1).
Example 2: Conditions not satisfied
Where the relevant Schedule conditions are not met for a particular tax year, Section 11(2) requires the income to be brought into charge under the Act for that year.
Example 3: Schedule VII person
A person covered by Schedule VII is not chargeable on total income only while the applicable Schedule VII conditions are fulfilled. If those conditions fail, Section 11(4) applies.
Comparison with the Income-tax Act, 1961
The subject of Section 11 of the Income-tax Act, 2025 broadly corresponds to Section 10 of the Income-tax Act, 1961. Section 11 of the 1961 Act instead concerned income from property held for charitable or religious purposes. References to the earlier Act should not be confused with the numbering under the 2025 Act.
Frequently asked questions
Is every income mentioned in Section 11 tax-free?
No. Exclusion depends on the conditions in the relevant Schedule and any applicable rules or notifications.
What happens if exemption conditions are breached?
Section 11(2) or 11(4), as applicable, provides for taxation under the Act in the relevant tax year.
Does Section 11 of the 2025 Act provide the charitable-trust exemption?
No. That was the subject of Section 11 of the 1961 Act. The 2025 Act has reorganised and renumbered provisions.
Which Schedules must be read with Section 11?
Schedules II to VI for specified incomes and Schedule VII for specified persons.
Official legislation and further reading
Last reviewed: 10 November 2026. General legal information; the statutory text and notifications govern individual cases.