TN Electricity Regulatory Commission Gets Income Tax Benefits on Specified Income

The Ministry of Finance, Department of Revenue (Central Board of Direct Taxes), through Notification No. 134/2025 dated 19th August 2025, has granted the Tamil Nadu Electricity Regulatory Commission (TNERC) certain income tax exemptions under section 10(46) of the Income-tax Act, 1961. This move formally recognizes the Commission as a statutory body eligible to claim tax relief on specified types of income.

The following incomes of TNERC will be exempt from Income Tax:

1. Government grants received.
2. Fees levied under the Electricity Act, 2003 (section 86(1)(g) read with section 181).
3. Penalties levied under section 146 of the Electricity Act, 2003.
4. Interest earned on bank deposits.

The exemption is subject to specific conditions. Tamil Nadu Electricity Regulatory Commission (TNERC) is required not to engage in any commercial activity, to keep the nature of its activities and specified income unchanged, and to file its income tax return in accordance with section 139(4C) of the Income-tax Act. These safeguards ensure that the benefits are strictly confined to its regulatory role and not extended to unrelated commercial ventures.

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Importantly, the notification states that this exemption shall apply retrospectively from the financial year 2022–23 (assessment year 2023–24). The accompanying explanatory memorandum certifies that granting retrospective effect will not adversely impact any taxpayer or person, clarifying the government’s intent to support regulatory bodies without creating inequities in the tax system.

About the TNERC

The Tamil Nadu Electricity Regulatory Commission (TNERC) is a statutory body. Its responsibilities include determining electricity tariffs, regulating power purchase and procurement, promoting renewable energy, protecting consumer interests, and ensuring a level playing field for stakeholders in the power sector. By design, the Commission operates in the public interest, balancing the needs of consumers, utilities, and the state government.

Through this notification, the Central Government has reaffirmed TNERC’s public-service character, acknowledging that its resources should be fully available for regulatory and developmental activities rather than diverted towards income tax payments.

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