Schedule II — INCOME NOT TO BE INCLUDED IN TOTAL INCOME

[See section 11]
INCOME NOT TO BE INCLUDED IN TOTAL INCOME
In computing the total income of a person for a tax year, the income mentioned
in column B of the Table below shall not be included, subject to fulfilment of the
conditions mentioned in column C of the said Table, and the expressions used in
columns B and C of the said Table, shall have the meaning respectively assigned to
them in the Notes below the said Table:
TABLE
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
1. Agricultural income. Nil.
2. Any sum received un -
der a life insurance
policy, including the
sum allocated by way
of bonus on such policy.
( a) The insurance policies, issued during the
period mentioned in column B of the table
below, except where such sum is received on
the death of a person, under a life Insurance
policy issued by, shall fulfil the conditions
mentioned in column C thereof:
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
Sl.
No.
Period of issue of
insurance policy
Conditions
A B C
1. 1st April, 2003 to
31st March, 2012.
Premium to sum assured
ratio is ≤ 20%.
2. 1st April, 2012 to
31st March, 2013.
Premium to sum assured
ratio is ≤ 10%.
3. 1st April, 2013
to 31st January,
2021.
Premium to sum assured
ratio is ≤ 15% for special
policy; and ≤ 10% for
other policies.
4. 1st February, 2021
to 31st March,
2023.
Unit linked insurance
policy:—
( A) premium to sum as-
sured ratio is ≤ 15%
for special policy;
and ≤ 10% for other
policies; and
( B) aggregate of pre -
mium for all such
policies (in any of
the tax years during
the term of all of
such policies) is ≤
` 2,50,000.
Other than unit linked
insurance policy:—
Premium to sum assured
ratio is ≤ 15% for special
policy; and ≤ 10% for
other policies.
5. On or after the 1st
April, 2023.
Unit linked insurance
policy:—
( a) premium to sum
assured ratio is ≤
15% for special
policy; and ≤ 10%
for other policies;
and
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
Sl.
No.
Period of issue of
insurance policy
Conditions
A B C
( b) aggregate of pre -
mium for all such
policies (in any of
the tax years dur -
ing the term of all
of such policies)
< ` 2,50,000.
Other than Unit linked
insurance policy:—
( i) premium to sum
assured ratio is <
15% for special
policy; and < 10%
for other policies;
and
( ii) aggregate of pre -
mium for all such
policies (in any of
the tax years dur -
ing the term of all
of such policies) is
< ` 5,00,000;
( b) the conditions of aggregate premium of
` 2,50,000 and ` 5,00,000 mentioned in
clause (a) shall not apply to any sum received
under a life Insurance policy issued on or
after the 1st April, 2025, by the International
Financial Services Centre Insurance Office;
( c) the following sums shall not be eligible for
exclusion from total income:––
( i) any sum received under section 127(4);
and
( ii) any sum received under a Keyman
insurance policy.
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
Note.—For removal of difficulties, the Board may issue
guidelines with the previous approval of the Central
Government, which shall be binding on the income-tax
authorities and the assessee and every guideline issued
by the Board under this clause shall be laid before each
House of Parliament.
3. Any payment from
a provident fund to
which the Provident
Funds Act, 1925 (19 of
1925) applies, or from
any other provident
fund set up by the
Central Government
and notified by it in
this behalf.
( a) The income by way of interest accrued during
the tax year shall not be eligible for exclusion
from total income where,––
( i) it is attributable to the contribution
(including aggregate thereof) made by
that person on or after the 1st April,
2021;
( ii) such contribution exceeds––
( A) ` 5,00,000 in a tax year in such
fund where no contribution is
made by the employer of such
person;
( B) ` 2,50,000 in other cases; and
( b) the amount of income not to be excluded
from total income as referred to in clause (a)
shall be computed in such manner, as may
be prescribed.
4. The accumulated bal -
ance due and becoming
payable to an employee
participating in a rec -
ognised provident fund
to the extent provided
in paragraph 8 of Part
A of the Schedule XI.
( a) The income by way of interest accrued during
the tax year shall not be eligible for exclusion
from total income where,––
( i) it is attributable to contribution (in -
cluding aggregate thereof) made by that
person on or after the 1st April, 2021;
and
( ii) such contribution exceeds––
( A) ` 5,00,000 in a financial year in
such fund where no contribution
is made by the employer of such
person; or
( B) ` 2,50,000 in other cases; and
( b) the amount of income not to be excluded
from total income as referred to in clause (a)
shall be computed in such manner as may
be prescribed.
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
5. Any payment from any
account opened as per
the Sukanya Samrid -
dhi Account Scheme,
2019 made under the
Government Savings
Promotion Act, 1873
(5 of 1873).
Nil.
6. Any payment from the
National Pension Sys -
tem Trust.
( a) Such payment is on closure of account of the
assessee or on his opting out of the pension
scheme referred to in section 124; and
( b) the said payment does not exceed 60% of
the total amount payable at the time of such
closure or his opting out of the scheme.
7. Any payment from the
Agniveer Corpus Fund
to a person enrolled
under the Agnipath
Scheme or to his nom-
inee.
Nil.
8. Any payment from an
approved superannua-
tion fund.
Such payment is made—
( a) on the death of a beneficiary;
( b) to an employee in lieu of or in commutation
of an annuity on his retirement at or after a
specified age or on his becoming incapaci -
tated prior to such retirement;
( c) by way of refund of contributions on the
death of a beneficiary;
( d) by way of refund of contributions to an em-
ployee on his leaving the service in connection
with which the fund is established otherwise
than by retirement at or after a specified age
or on his becoming incapacitated prior to
such retirement, to the extent to which such
payment does not exceed the contributions
made prior to the commencement of this Act
and any interest thereon; or
( e) by way of transfer to the account of the
employee under a pension scheme referred
to in section 124 and notified by the Central
Government in this behalf.
9 Scholarships. Such scholarship is granted to meet the cost of
education.
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
10. Any payment made,
whether in cash or in
kind for any award or
reward.
Such payment is made––
( a) in pursuance of any award instituted in the
public interest by the Central Government
or any State Government or instituted by
any other body and approved by the Central
Government in this behalf; or
( b) as a reward by the Central Government or
any State Government for such purposes as
may be approved by the Central Government
in this behalf in public interest.
11. Income by way of in -
terest, premium on
redemption or other
payment on such secu-
rities, bonds, annuity
certificates, savings
certificates, other cer -
tificates issued by the
Central Government
and deposits.
Such certificates and deposits are notified by the
Central Government, subject to such conditions
and limits as specified therein.
12. Interest on Gold De -
posit Bonds issued
under the Gold De -
posit Scheme, 1999
or deposit certificates
issued under the Gold
Monetisation Scheme,
2015 notified by the
Central Government.
Nil.
13. Interest on bonds is -
sued by a local author-
ity or by a State Pooled
Finance Entity.
As specified by the Central Government, by no -
tification.
14. Any income arising
from the transfer of
a capital asset, be -
ing a unit of the Unit
Scheme, 1964 referred
to in Schedule I to the
Unit Trust of India
(Transfer of Undertak-
ing and Repeal) Act,
2002 (58 of 2002).
The transfer of such asset takes place on or after
the 1st April, 2002.
Sl.
No.
Income not to be
included in total
income
Conditions
A B C
15. Any payment from
the National Pension
System Trust received
by an assessee, who is
a subscriber to the Uni-
fied Pension Scheme;
( a) such payment received at the time of his
superannuation or voluntary retirement or re-
tirement under rule 56(j) of the Fundamental
Rules [which is not treated as penalty under
the Central Civil Services (Classification,
Control and Appeal) Rules, 1965]; and
( b) the said payment does not exceed 60% of the
Individual corpus, as defined in notification
number FX-1/3/2024-PR of the Depart -
ment of Financial Services, dated the 24th
January, 2025.
16. Any sum received as
“lump sum amount”
from the National Pen-
sion System Trust by an
assessee being a sub -
scriber to the Unified
Pension Scheme.
The said “lump sum amount” is as per clause (vi)
of Para 2, of the Notification number FX-1/3/2024-
PR of the Department of Financial Services, dated
the 24th January, 2025.
17. Any income covered
under section 10( 15)
(iii) or (15)(iv)(c), (15)
(iv)(d), (15)(iv)(e), (15)
(iv)(f), ( 15)(iv)(g) or
(15)(iv)(h) or ( 36) of
the Income-tax Act,
1961 (43 of 1961), sub-
ject to the conditions as
provided therein.
Nil.
Note 1: For the purposes of Sl. No. 2,––
( a) “actual capital sum assured” shall have the meaning assigned to it in paragraph
2(2) of Schedule XV;
( b) “International Financial Services Centre Insurance Office” shall have the same
meaning as assigned to it* regulation 3(1)(k) of the International Financial Ser-
vices Centre Authority (Registration of Insurance Business) Regulations, 2021,
made under the International Financial Services Centres Authority Act, 2019 (50
of 2019);
( c) “Keyman insurance policy” means a life insurance policy––
( i) taken by a person on the life of another person;
( ii) such person is or was the employee of the first-mentioned person or is or
was connected in any manner with the business of the first-mentioned
person; and
( iii) includes such policy which has been assigned to a person at any time during
the term of the policy, with or without any consideration;
( d) “premium to sum assured ratio” shall mean the highest percentage of annual
premium payable to the actual capital sum assured, during the term of the policy;
( e) “special policy” means any policy issued on life of any person, who is—
( i) a person with disability or a person with severe disability as referred to in
section 154; or
( ii) suffering from disease or ailment as specified in the rules made under
section 128;
( f) “United Linked Insurance Policy” means a unit linked life insurance policy,––
( i) which has components of both investment and insurance; and
( ii) is linked to a unit as defined in regulation 3( ee) of the Insurance
Regulatory and Development Authority of India (Unit Linked
Insurance Products) Regulations, 2019 made under the Insurance Regula-
tory and Development Authority Act, 1999 (41 of 1999);
Note 2: For the purposes of Sl. No. 7, the expression “ Agniveer Corpus Fund” and
“Agnipath Scheme” shall have the meanings respectively assigned to them in section 125.
Note 3: For the purposes of Sl. No. 11, the expression “interest” includes hedging transaction
charges on account of currency fluctuation.
Note 4: For the purposes of Sl. No. 13, the expression “State Pooled Finance Entity” means
such entity which is set up as per the guidelines for the Pooled Finance Development Scheme
notified by the Central Government in the Ministry of Housing and Urban Affairs.