Section 6. Section 29 of said Code is hereby amended to read as follows:

"Sec. 29. Taxable net income. — (a) Computation. — For purposes of determining the tax prescribed in Section 21(b) and Section 24, "taxable net income" is gross income as defined in paragraph (b) hereof, less the deductions allowed by Section 30 and, in the case of individuals, the personal and additional exemptions allowed under Section 23.

"(b)"Gross income" defined. — "Gross income" includes gains, profits, and income derived from professions, vocations, trades, business, commerce, sales, or from dealings in property, whether real or personal, or growing out of the ownership or use of property or any interest therein; and from interest, rents, dividends, securities, or the transactions of any business carried on for gain or profit, or gains, profits and income of whatever kind and in whatever form derived from any source: Provided, however, That gross compensation income and items of gross income subject to the final income tax under this Title shall not be included in "gross income".

"(c)Exclusions from gross income. — The following items shall not be included in gross income and shall be exempt from taxation under this Title:

"(1)Life Insurance. — The proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured, whether in a single sum or otherwise, but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income.

"(2)Amount received by insured as return of premium. — The amount received by the insured, as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract.

"(3)Gifts, bequests, and devises. — The value of property acquired by gift, bequest, devise, or descent; but the income from such property shall be included in gross income.

"(4)Interest on Government securities. — Interest upon the obligations of the Government of the Republic of the Philippines or any political subdivisions thereof, but in the case of such obligations issued after the approval of this Code, only to the extent provided in the act authorizing the issue thereof.

"(5)Compensation for injuries or sickness. — Amounts received, through Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness.

"(6)Income exempt under treaty. — Income of any kind, to the extent required by any treaty obligation binding upon the Government of the Philippines.

"(7)Retirement benefits, pensions, gratuities, etc. —

"(A)Retirement benefits received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of this subsection, the term 'reasonable private benefit plan' means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, wherein contributions are made by such employer for officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.

"(B)Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee.

"(C)The provisions of any existing law to the contrary notwithstanding, social security benefits, retirement gratuities, pensions and other similar benefits received by resident or non-resident citizens of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public.

"(D)Payments of benefits due or to become due to any person residing in the Philippines under the laws of the United States administered by the United States Veterans Administration.

"(E)Payments of benefits made under the Social Security Act of 1954, as amended.

"(F)Benefits received from the GSIS and the retirement gratuity received by government officials and employees.

"(8)Miscellaneous items. — (A) Income received from their investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on their deposits in banks in the Philippines by (1) foreign governments, (2) financing institutions owned, controlled, or enjoying refinancing from them, and (3) international or regional financing institutions established by governments.

"(B)Income derived from any public utility or from the exercise of any essential governmental function accruing to the Government of the Philippines or to any political subdivision thereof.

"(C)Income derived as rewards under Republic Act Numbered Twenty-three hundred and thirty-eight, as amended by Presidential Decree No. 707.

"(D)Interest earned from deposits maintained with a bank under the expanded foreign currency deposit system."