In India, there are very few fully tax-free businesses, with agricultural income being the primary example. Under Section 10(1) of the Income Tax Act, income from agriculture and related activities (like farming, poultry, and dairy) is completely exempt from income tax. Other tax-exempt entities include charitable trusts registered under Section 80G and registered political parties.
Exempt organization types
Example: Healthcare services, educational services, and public utility services (e.g., water supply) are exempt from GST. This exemption is unconditional, meaning the supply is fully exempt from GST without any terms or conditions attached.
Any income which has a base source of agriculture is tax-free. Anything that you receive as 'inheritance' is tax-free. You are not liable to pay any taxes (for pushtaini jaydad). Under section 80E, Interest on education loan is also tax-free.
In her 2025 Budget speech, Finance Minister Nirmala Sitharaman shared big news. Under the new regime, if you earn up to Rs 12 lakh, you will not have to pay any income tax. Salaried taxpayers get an extra benefit too. The standard deduction, which was Rs 50,000 before, has now gone up to Rs 75,000 for the new regime.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
These include HP, Nike, Jacobs Engineering, Advanced Micro Devices and Ecolab. Tax breaks for renewable energy are part of the tax avoidance scheme for several companies, including Qurate Retail, Xcel Energy, DTE, and Duke Energy.
Agricultural business is also known as tax-free business in India. According to Section 10(1) of the Income Tax Act of 1961, agricultural income is exempt from taxation.
Examples of income that are not taxable in India include agricultural income, gifts and inheritances, interest on EPF and PPF, scholarships and awards, life insurance proceeds, leave encashment, gratuity, Long-Term Capital Gains (LTCG), and interest on tax-free bonds.
GSTR-4 (For Composition Scheme Businesses)
This is for small businesses that have chosen the GST Composition Scheme (yearly sales up to ₹1.5 crores, or ₹75 lakhs in special states). These businesses pay a small, fixed percentage of their sales as tax and have simpler rules. How Often to File: Annually.
Goods and services exempted from VAT are:
Arts, culture, and humanities (e.g., art museums, historical societies) Education (e.g., private schools, universities, parent-teacher associations) Environment and animals (e.g., humane societies, the Chesapeake Bay Foundation) Health (e.g., nonprofit hospitals, the American Lung Association)
5 more ways to get tax-free income
With the recent changes in the Indian Income Tax Act, it's now possible to pay zero tax on a salary of up to Rs. 7 lakhs. To pay zero tax on a 7 lakh salary using the old tax regime, maximize deductions: Claim Tax Rebate under Section 87A.
Your annual tax payable can be reduced by pre-paying some of your tax-deductible expenses, such as prepaying the interest on an investment loan. If you can pay some of your expenses in advance, you won't have to worry about paying them the next year, and you can claim them as a tax deduction in the current year.
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For instance, Salesforce paid no federal income taxes in 2021, despite $2.7 billion in U.S. earnings; Duke Energy paid no federal income taxes in 2021, despite $3.7 billion in U.S. earnings; and Kinder Morgan paid no federal income taxes in 2021, despite $2.2 billion in U.S. earnings.
Although Google claims it has paid all due taxes, it is under scrutiny from regulators and authorities around the world. Alphabet's Google shifted €15.9 billion (US $19.1 billion) to a Bermuda shell company in 2016, shielding it from at least US$3.7 billion in taxes, regulatory filings in the Netherlands show.