On October 16, 2024, the Central Board of Direct Taxes (CBDT), through a notification issued under the Ministry of Finance, clarified that any payments received from the Reserve Bank of India (RBI) will be exempt from the tax collection at source (TCS) requirements under Section 206C(1F) of the Income Tax Act, 1961.
The CBDT notification stated that — “In exercise of the powers conferred by sub-section (12) of section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies that no collection of tax shall be made under sub-section (1F) of section 206C of the said Act on any payment received from the Reserve Bank of India.
This notification shall come into force on the date of its publication in the Official Gazette.”
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The Reserve Bank of India (RBI) is by law exempt from income tax and super-tax under the Reserve Bank of India Act, 1934. The Central Government also exempts the RBI from tax collection under the Income-tax Act, 1961.
As per Section 48 (Exemption of Bank from income-tax and super-tax) of the RBI Act, 1934, Bank shall not be liable to pay income-tax or super-tax on any of its income, profits or gains.
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