Income Tax Exemption under Section 10(46A): CBDT Notifies NOIDA
In a significant tax relief move, the New Okhla Industrial Development Authority (NOIDA) has been granted income tax exemption under Section 10(46A) of the Income Tax Act, 1961. This comes via CBDT Notification No. 116/2025 dated 17 July 2025, and is applicable from AY 2024–25 onwards.
The notification follows the Finance Act, 2023 which introduced Section 10(46A), carving out a new exemption regime for statutory authorities created for public service. Let’s break down what this means for NOIDA, its stakeholders, and other development bodies in India.
What is Section 10(46A) of the Income Tax Act?
Section 10(46A), introduced by the Finance Act 2023, allows the Central Government to exempt income of notified statutory bodies that are:
- Established by Central or State Acts
- Notified for public purpose
- Not engaged in commercial profit-making
- Responsible for planning, development, or regulation in urban/industrial zones
This is a targeted benefit — similar to the earlier Section 10(46) which covered autonomous bodies and boards — but designed specifically for urban and industrial development authorities.
Who Qualifies Under Section 10(46A)?
To qualify for this exemption:
- The entity must be created under an Act of Parliament or State Legislature
- Must serve a public utility function
- Must be notified by the CBDT via official notification
- Exemption applies only to specified income, as listed in the notification
What Does CBDT Notification 116/2025 Say?
As per the official notification, the following incomes of NOIDA are exempt under Section 10(46A):
- Amounts received from the State Government
- Monies received from disposal of assets
- Fees, charges, and rent collected from allottees and industrial units
- Interest income earned on these receipts
- Any other income arising from its mandated statutory functions
This exemption is not available for income from activities not authorized under the UP Industrial Area Development Act, 1976.
Why Was NOIDA Chosen?
NOIDA is one of India’s largest and most strategically planned industrial development authorities, created under the Uttar Pradesh Industrial Area Development Act, 1976. It plays a vital role in:
- Urban infrastructure development
- Industrial area planning and allocation
- Promoting MSMEs and IT hubs in NCR
- Generating revenue for reinvestment in public assets
The exemption helps align its operations more closely with public interest, without the tax burden on its statutory functions.
How Will This Impact Industrial Development?
A 2022 World Bank study found that tax exemptions for such authorities can lead to 15% more infrastructure reinvestment. For NOIDA, this means:
- Higher fund allocation for roads, drainage, and utilities
- Faster approvals and project implementation
- Cost savings that can benefit industries and startups operating within its jurisdiction
- Strengthening NCR’s role in India’s manufacturing and IT exports
Expert Insight: Practical Angle for Other Authorities
According to tax experts, this move signals a favourable policy shift for statutory development authorities across India. Entities like GNIDA, YEIDA, CIDCO, HMDA, and GIDC may also seek similar exemptions, provided they:
- Maintain clear segregation of statutory vs commercial income
- Submit detailed audit and function reports
- Apply through their respective State Governments for CBDT notification
Comparison: Section 10(46) vs Section 10(46A)
| Feature | Section 10(46) | Section 10(46A) |
|---|---|---|
| Applicability | Autonomous bodies, boards, and corporations | Statutory development authorities |
| Introduced in | Prior to 2023 | Finance Act, 2023 |
| Focus | General public utility | Urban/industrial infrastructure authorities |
| Example Entities | ICAI, ICSI, FSSAI | NOIDA, potentially CIDCO, DDA |
| Tax Treatment | Exemption of specified income post notification | Similar, but tailored to statutory planning bodies |
Action Points for Stakeholders
- Taxpayers dealing with NOIDA: Understand which payments to NOIDA are exempt vs taxable
- Other development bodies: Can explore similar exemption route under 10(46A)
- Consultants and tax firms: Should track more such notifications and help clients with representation
- Investors in NOIDA zones: May benefit from improved infrastructure deployment and stable policies
FAQs
Q1. Is this exemption retrospective?
No. It applies from AY 2024–25 onwards.
Q2. Can NOIDA still be taxed for non-core income?
Yes. Only the notified sources of income are exempt. Any unrelated business income may still be taxable.
Q3. How can another authority apply for 10(46A)?
They must apply through the State Government, and the CBDT will notify based on qualifying conditions.
Summary
CBDT has notified income tax exemption for NOIDA under Section 10(46A) from AY 2024–25. It covers specified income like rent, fees, and grants, allowing the authority to focus on industrial development without tax burden.
Final Word
The notification for NOIDA under Section 10(46A) is more than just a tax relief — it reflects India’s commitment to strengthening urban development through strategic tax policy. Expect similar moves in other states soon.
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