CBDT Notifies Income Tax Exemption to Karnataka State Building and Other Construction Workers Welfare Board u/s 10(46) [Read Order]

The “Karnataka State Building and Other Construction Workers Welfare Board” has been granted income tax exemption under section 10(46) of the Income-tax Act, 1961 (“the IT Act”) by the Central Board of Direct Taxes (“CBDT”) via Notification No. 12/2023 dated March 3, 2023. The current notification will be applicable for the financial years 2022-2023, 2023-2024 and 2024-2025 i.e., (2022-25).

The cess collected on building costs, registration fees, annual subscriptions, and interest earned on these are all excluded from the exemption. A Board established by the State of Karnataka for the purpose of allocating the following defined income to the Board:

1. Cess collected on construction cost levied u/s 3(1) of the Building and Other Construction Workers’ Cess Act, 1996;
2. Registration fee & annual subscriptions received from the establishments; and
3. Interest earned on (a) & (b) above.

Further mentioned in the circular that the notification shall only be applicable when  the Karnataka State Building and Other Construction Workers Welfare Board,-

1. shall not engage in any commercial activity;
2. activities and the nature of the specified income shall remain unchanged throughout the financial years; and
3. shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961.

The notification further indicates that no one would suffer an adverse effect as a result of this notification taking effect retroactively.

The instant notification will really help the building and other construction workers. According to section 10(46) of Income Tax Act, any specified income accruing to any body/authority/Board/ Trust/Commission (or a class thereof) that has been established or created pursuant to a Central, State, or Provincial Act, or that has been created by the Government or a State Government with the purpose of regulating or administering any activity for the benefit of the general public and is not engaged in any commercial activity and is notified by the Central Government in the Official Gazette for the purposes of this clause is exempt from tax.

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