Income Tax Exemption for Karnataka State Pollution Control Board: CBDT Notification Explained
The focus keyphrase “income tax exemption” is crucial to understanding a recent development in Indian tax law. The Central Board of Direct Taxes (CBDT) has officially granted income tax exemption to the Karnataka State Pollution Control Board (KSPCB) under Section 10(46) of the Income-tax Act, 1961. Here’s a simplified breakdown of what this means, why it matters, and how it impacts similar statutory bodies.
What is Section 10(46) of the Income-tax Act?
Section 10(46) offers tax exemption to specified statutory authorities, boards, and bodies that are:
- Established by a Central or State Act
- Engaged in public functions such as regulation, monitoring, or service delivery
- Notified by the CBDT for exemption, subject to conditions
CBDT Notification Highlights
As per CBDT Notification No. 54/2025 dated 02.07.2025, the Karnataka State Pollution Control Board is exempt from income tax under Section 10(46), effective FY 2024–25 onwards, for specific income sources:
Exempt Incomes Include:
- Government grants
- Consent fees
- Authorization fees
- Interest income from government securities and bank deposits
- Income from testing and certification charges
- Any other income arising from statutory functions under the Water Act and Air Act
Official Source: Read the notification on incometaxindia.gov.in
Conditions Attached to the Exemption
The exemption is not automatic. It is subject to certain conditions:
- KSPCB must not engage in any commercial activity
- Separate books must be maintained for the specified income
- Exemption applies only to incomes listed in the notification
- The Board must file its return of income under Section 139(4C)
Failure to meet these conditions can revoke the exemption.
Why This Matters: Legal and Compliance Perspective
This exemption aligns with the Supreme Court’s stance that bodies discharging regulatory functions without a profit motive should not be burdened with tax. It also reflects the CBDT’s broader strategy to streamline tax relief for public-interest entities.
Expert View:
“Such exemptions promote efficient delivery of statutory responsibilities. But strict compliance with accounting and reporting norms is critical,” says CA Meena Krishnamurthy, Bengaluru.
Similar Bodies That Enjoy Section 10(46) Exemption
| Authority/Board | State | Nature of Functions |
|---|---|---|
| Tamil Nadu State Pollution Control Board | Tamil Nadu | Environmental regulation |
| Gujarat Real Estate Regulatory Authority (RERA) | Gujarat | Real estate compliance |
| Maharashtra State Electricity Regulatory Comm. | Maharashtra | Power tariff regulation |
You can find the full list of notified bodies on the CBDT Notification Archive.
Practical Takeaway for Tax Professionals
- Consultants and CA firms handling such bodies should review their income heads to check eligibility.
- Boards/authorities must ensure segregated books of accounts to avoid complications.
- Regular compliance under Section 139(4C) is non-negotiable.
FAQs
Q1. Is KSPCB fully exempt from income tax?
No. Only specified income sources mentioned in the CBDT notification are exempt.
Q2. Does this mean private pollution testing labs also get exemption?
No. Section 10(46) applies only to government-established bodies notified by CBDT.
Q3. What if KSPCB earns income from commercial activities?
That income will be taxable, and may even jeopardize the entire exemption if not reported properly.
Summary
CBDT has granted income tax exemption to Karnataka State Pollution Control Board under Section 10(46) for specific statutory incomes. Notification No. 54/2025 outlines the scope, conditions, and compliance requirements.
Final Word
Exemptions under Section 10(46) are not blanket reliefs. They are carefully designed tax benefits for public-interest institutions — with tight conditions. For boards like KSPCB, this relief helps focus on regulatory duties without financial drag. But the compliance rope is tight.
Need help with tax filings for statutory bodies or public authorities?
Efiletax.in can guide you through Section 10(46) compliance, accounting, and return filing.