Lump-sum exempt amounts

A lump-sum exemption refers to a predetermined amount of income, wealth, or gains that is completely free from tax. Anyone whose earnings or asset values fall within this limit is not liable to pay tax on that portion. Such exemptions aim to provide relief to lower-income groups and maintain uniformity, as all eligible taxpayers receive the same basic level of tax-free allowance.

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For instance, under India’s old income tax framework, an individual with annual income up to ₹2.5 lakh is not required to pay any income tax. Likewise, if a person’s net wealth does not exceed the statutory threshold for wealth tax, no tax is levied. These uniform exemption ceilings ensure that taxation applies only to those whose income or wealth surpasses the minimum exempt level.