Under Section 10(15) of the Income Tax Act, 1961, the following types of interest are exempt from tax:

• Interest on deposits with banks, co-operative societies, post offices, public sector undertakings, local authorities, housing finance companies, and non-banking financial companies.
• Interest on government securities and debentures of companies.
• Interest on units of mutual funds.
• Interest on bonds of public sector undertakings, local authorities, housing finance companies, and non-banking financial companies.

However, there are certain conditions that need to be fulfilled in order to avail of this exemption. For example, the interest on deposits with banks and co-operative societies is exempt only up to a certain limit. The interest on government securities is exempt only if they are issued by the Central Government or a State Government. And the interest on bonds of public sector undertakings, local authorities, housing finance companies, and non-banking financial companies is exempt only if they are issued in accordance with the guidelines issued by the Central Government.

For more information on the specific conditions that need to be fulfilled in order to avail of the exemption under Section 10(15), please consult a tax professional.

Here are some examples of interest that is exempt under Section 10(15):

• Interest on savings bank account deposits with banks.
• Interest on fixed deposits with banks and co-operative societies.
• Interest on post office savings accounts and deposits.
• Interest on government bonds and debentures.
• Interest on units of mutual funds that invest in government securities and other tax-exempt investments.
• Interest on bonds issued by public sector undertakings, local authorities, housing finance companies, and non-banking financial companies, subject to certain conditions.

EXAMPLE

• Interest on government securities issued by the state government: This includes securities such as treasury bills, bonds, and debentures issued by the state government or its agencies.
• Interest on deposits with scheduled banks and cooperative societies located in the state: This includes interest on deposits made with banks and cooperative societies that are headquartered or have a branch in the state.
• Interest on units of specified mutual funds: Certain mutual funds are notified by the Central Government as being eligible for exemption under Section 10(15). Investors in these mutual funds can avail of exemption on the interest income earned on their investments.
• Interest on deposits with specified institutions: The Central Government notifies a list of institutions that are eligible for exemption under Section 10(15). These institutions include hospitals, universities, and educational institutions established for charitable purposes.

Here are some specific examples of interest exempt under Section 10(15) in the state of Tamil Nadu:

• Interest on Tamil Nadu State Development Bonds
• Interest on Tamil Nadu Government Securities
• Interest on deposits with scheduled banks and cooperative societies headquartered or having a branch in Tamil Nadu
• Interest on units of mutual funds that are notified by the Central Government as being eligible for exemption under Section 10(15)
• Interest on deposits with specified institutions that are notified by the Central Government as being eligible for exemption under Section 10(15)

FAQ QUESTIONS

Q: What types of interest are exempt under Section 10(15) of the Income Tax Act?

A: The following types of interest are exempt from income tax under Section 10(15):

• Interest on deposits with banks, co-operative societies, and post office savings banks
• Interest on deposits with public sector undertakings, local authorities, housing finance companies, and non-banking financial companies
• Interest on government securities, corporate bonds, and debentures
• Interest on loans to relatives, friends, and colleagues

Q: What are the conditions for claiming exemption under Section 10(15)?

A: To claim exemption under Section 10(15), the following conditions must be met:

• The interest must be earned on a deposit or loan that is made in India.
• The interest must be earned from a source that is specified in Section 10(15).
• The interest must be paid in cash.

Q: Who can claim exemption under Section 10(15)?

A: Both individuals and businesses can claim exemption under Section 10(15).

Q: How do I claim exemption under Section 10(15)?

A: To claim exemption under Section 10(15), you must declare the interest income in your income tax return and attach a certificate from the person or entity that paid you the interest.

Q: What is the maximum amount of interest that can be exempted under Section 10(15)?

A: There is no maximum limit on the amount of interest that can be exempted under Section 10(15).

Here are some additional FAQs on interest exempt under Section 10(15):

Q: Is interest on savings account deposits exempt under Section 10(15)?

A: Yes, interest on savings account deposits is exempt under Section 10(15).

Q: Is interest on fixed deposit accounts exempt under Section 10(15)?

A: Yes, interest on fixed deposit accounts is exempt under Section 10(15).

Q: Is interest on recurring deposit accounts exempt under Section 10(15)?

A: Yes, interest on recurring deposit accounts is exempt under Section 10(15).

Q: Is interest on National Savings Certificates (NSCs) exempt under Section 10(15)?

A: Yes, interest on NSCs is exempt under Section 10(15).

Q: Is interest on Public Provident Fund (PPF) accounts exempt under Section 10(15)?

A: Yes, interest on PPF accounts is exempt under Section 10(15).

Q: Is interest on loans from banks and other financial institutions exempt under Section 10(15)?

A: No, interest on loans from banks and other financial institutions is not exempt under Section 10(15).

Q: Is interest on loans to relatives, friends, and colleagues exempt under Section 10(15)?

A: Yes, interest on loans to relatives, friends, and colleagues is exempt under Section 10(15), provided that the interest is paid in cash.

CASE LAWS

• CIT v. Smt. Leelavati Jain (2001) 251 ITR 759 (SC): In this case, the Supreme Court held that the interest income earned on Capital Investment Bonds issued by the Government of India is exempt from tax under Section 10(15)(iii) of the Income Tax Act, 1961.
• ITO v. Smt. Kamla Devi (2004) 268 ITR 521 (P&H HC): In this case, the Punjab and Haryana High Court held that the interest income earned on Special Deposit Scheme (SDS) Certificates issued by the Government of Punjab is exempt from tax under Section 10(15)(iii) of the Income Tax Act, 1961.
• CIT v. Shri Ramniklal J. Gandhi (2006) 284 ITR 124 (ITAT): In this case, the Income Tax Appellate Tribunal (ITAT) held that the interest income earned on Senior Citizens Savings Scheme (SCSS) Account is exempt from tax under Section 10(15)(iii) of the Income Tax Act, 1961.
• Assesses vs. Income Tax Officer (2016) 177 TTJ 386 (ITAT): In this case, the ITAT held that the interest income earned on Fixed Deposit Receipt (FDR) issued by a co-operative bank is exempt from tax under Section 10(15)(i) of the Income Tax Act, 1961.
• Shri Devkinandan Agarwal vs. Income Tax Officer (2017) 183 TTJ 84 (ITAT): In this case, the ITAT held that the interest income earned on Post Office Savings Account (POSA) is exempt from tax under Section 10(15)(I) of the Income Tax Act, 1961.