Under the newly proposed union budget 2023-2024 the Finance Minister Nirmala Sitharaman proposed Income Tax exemptions for development authorities.
Finance minister announced that,
“It is proposed to provide exemption to any income arising to a body or authority or board or trust or commission, (not being a company) which has been established or constituted by or under a Central or State Act with the purposes of satisfying the need for housing or for planning, development or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out commercial activity”
According to the memorandum of Finance Bill 2023 the Union government introduced a new clause under section 10 (46) of the Income Tax Act 1961 .
Section 10 of the income tax act 1961 provides for computing total income of a person in the previous year certain income not considered which means exemptions for computing total income.
Under section 10(46) income tax act 1961 provides that an income arises to any authority/body /board/trust/commission/ which has been constituted under any central government or state government with the object of regulating or administering any activity for benefit of the general public and is not engaged in any commercial activity such income shall be considered to be exemption.
As per this new clause of 10(46A) Income Tax Act 1961, any income arising to a body or authority or Board or Trust or Commission, not being a company, which –
(a) has been established or constituted by or under a Central Act or State Act with one or more of the following purposes, namely:–
(i) dealing with and satisfying the need for housing accommodation;
(ii) planning, development or improvement of cities, towns and villages;
(iii) regulating, or regulating and developing, any activity for the benefit of the general public; or
(iv) regulating any matter, for the benefit of the general public, arising out of the object for which it has been created; and
Such authorities are exempted from Income tax as per the new clause. Hence this amendment effected from 1st day of April, 2024.
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