Comprehensive Guide to Section 10(23B) of the Income Tax Act: Understanding Incomes Not Included in Total Income
Introduction
In India, certain types of income are exempt from being included in the total income for tax purposes under Section 10 of the Income Tax Act. This section provides specific exemptions for various organizations and institutions, primarily focusing on charitable trusts, religious and charitable bodies, international organizations, and regulatory authorities. Understanding these exemptions is crucial for entities seeking to leverage these benefits and for individuals who need to comprehend how these provisions might apply to them.
Section 10(23B): Income of Public Charitable Trusts and Societies
Eligibility:
- Institutions constituted as public charitable trusts or registered under the Societies Registration Act, 1860, or similar laws in India.
- Must exist solely for the development of khadi or village industries, not for profit.
Conditions:
- Income must be attributable to the business of production, sale, or marketing of khadi or village industry products.
- The institution must apply or accumulate its income solely for the development of khadi or village industries.
- Must be approved by the Khadi and Village Industries Commission, which grants approval for a maximum of three assessment years.
Withdrawal of Approval:
- The Khadi and Village Industries Commission can withdraw approval if the institution fails to apply or accumulate income as required or fails to carry out activities as per the conditions of approval.
- The institution is given a reasonable opportunity to show cause before approval is withdrawn.
Definitions:
- “Khadi and Village Industries Commission” refers to the commission established under the Khadi and Village Industries Commission Act, 1956.
- “Khadi” and “village industries” are defined in the same Act.
Section 10(23BBA): Income of State Khadi and Village Industries Boards
Eligibility:
Authorities established by or under State or Provincial Acts for the development of khadi or village industries.
Definition:
“Khadi” and “village industries” have the same meanings as defined in the Khadi and Village Industries Commission Act, 1956.
Section 10(23BBA): Income of Religious or Charitable Trusts and Endowments
Eligibility:
- Bodies or authorities established or appointed under Central, State, or Provincial Acts for the administration of public religious or charitable trusts and endowments.
- Includes administration of religious places like temples, gurdwaras, mosques, churches, synagogues, and other public places of religious worship.
Exclusion:
The income of any specific trust, endowment, or society itself is not exempt under this clause.
Section 10(23BBB): Income of the European Economic Community (EEC) in India
Eligibility:
Income derived by the EEC by way of interest, dividends, or capital gains from investments in India.
Conditions:
Investments must be made out of EEC funds under schemes specified by the Central Government.
Definition:
“European Economic Community” refers to the entity established by the Treaty of Rome on March 25, 1957.
Section 10(23BBC): Income of the SAARC Fund for Regional Projects
Eligibility:
Income of the SAARC Fund for Regional Projects as per the Colombo Declaration of December 21, 1991, by the South Asian Association for Regional Cooperation (SAARC).
Purpose:
Established under the Charter of SAARC for regional cooperation.
Section 10(23BBD): Income of the Secretariat of the Asian Organisation of Supreme Audit Institutions (ASOSAI)
Eligibility:
Income of ASOSAI Secretariat registered under the Societies Registration Act, 1860.
Time Frame:
Exemption applies to ten previous years relevant to assessment years from April 1, 2001, to March 31, 2011.
Section 10(23BBE): Income of the Insurance Regulatory and Development Authority (IRDA)
Eligibility:
Income of IRDA established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999.
Section 10(23BBG): Income of the Central Electricity Regulatory Commission (CERC)
Eligibility:
Income of CERC constituted under section 76(1) of the Electricity Act, 2003.
Section 10(23BBH): Income of Prasar Bharati (Broadcasting Corporation of India)
Eligibility:
Income of Prasar Bharati established under section 3(1) of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990.
FAQs
1. What is the main purpose of Section 10 of the Income Tax Act?
Section 10 provides specific exemptions for various types of income, primarily to support charitable activities, religious endowments, international cooperation, and regulatory functions.
2. How does an institution qualify for the exemption under Section 10(23B)?
An institution must be a public charitable trust or a registered society existing solely for the development of khadi or village industries, and it must be approved by the Khadi and Village Industries Commission.
3. What happens if an institution fails to meet the conditions for exemption under Section 10(23B)?
The Khadi and Village Industries Commission can withdraw the approval after giving the institution a reasonable opportunity to show cause.
4. Are there any time limitations on the exemptions provided under Section 10?
Yes, some exemptions, like those for the ASOSAI Secretariat under Section 10(23BBD), apply to specific assessment years.
5. Where can I get more information on tax exemptions and other related topics?
For more detailed insights and expert advice, visit Smart Tax Saver for comprehensive guides and professional consultancy services on various tax-related topics.
Conclusion
Understanding the exemptions provided under Section 10 of the Income Tax Act is essential for various organizations and entities that qualify for these benefits. These exemptions support the development of public charitable activities, religious endowments, and specific international and regulatory bodies, fostering a diverse range of social, economic, and cultural advancements in India. For more detailed insights and expert advice on leveraging these exemptions, consult with a tax professional or legal advisor.
