Income tax exemption for NOIDA under Section 10(46A)
The Central Board of Direct Taxes (CBDT), via Notification No. 116/2025 dated 17th July 2025, has granted income tax exemption for NOIDA under Section 10(46A) of the Income-tax Act, 1961. This move, applicable from Assessment Year 2024–25, marks a policy shift towards incentivising public utility authorities involved in industrial and infrastructure development.
But what does this exemption really mean, and who else can benefit from Section 10(46A)? Let’s break it down.
What is Section 10(46A)?
Introduced by the Finance Act, 2023, Section 10(46A) provides income-tax exemption to certain authorities or boards notified by the Central Government.
- Established by Acts of Parliament or State legislatures, or
- Constituted by Central or State Governments,
- Engaged in public service functions such as urban planning, industrial infrastructure, or economic development.
Key conditions for exemption:
- Entity must be notified by CBDT under this section.
- Income must be not for profit, and
- It must be used only for the objects for which the authority was established.
Why is NOIDA exempted under Section 10(46A)?
The New Okhla Industrial Development Authority (NOIDA) is a statutory authority set up under the Uttar Pradesh Industrial Area Development Act, 1976. It has long been a driver of urban infrastructure, industrial promotion, and economic growth in the Delhi-NCR region.
CBDT’s notification recognises:
- NOIDA’s role as a public utility body, and
- Its non-profit nature under government control.
This makes NOIDA eligible for exemption under Section 10(46A), effective from AY 2024–25.
What income is exempt for NOIDA?
As per Notification No. 116/2025, the following types of income are now exempt for NOIDA:
- Grants and subsidies received from the government
- Income from allotment or leasing of industrial plots
- Interest income from bank deposits or government securities
- Any income incidental to its core operations
📌 Note: The exemption is available only if NOIDA files its return of income under Section 139(4C) and maintains proper books of accounts.
Impact on Industrial Development and Economy
Potential Benefits:
- Lower cost of development: Since NOIDA won’t be taxed on its income, it can reinvest more into urban infrastructure.
- Boost to ease of doing business: Cheaper, faster allotment of industrial plots and services.
- Investor confidence: Tax exemptions signal regulatory stability, helping attract both domestic and FDI.
Cautionary Note:
Experts warn that while such exemptions promote growth, proper auditing and accountability are essential to ensure funds are used only for developmental goals.
How Section 10(46A) differs from Section 10(46)
| Feature | Section 10(46) | Section 10(46A) |
|---|---|---|
| Introduced by | Finance Act, 2011 | Finance Act, 2023 |
| Target entities | Bodies performing regulatory/statutory role | Public utility development authorities |
| Examples | FSSAI, EPFO | NOIDA, DMIDC, industrial area boards |
| Governing framework | Notification + Rule 2RB | Notification under 10(46A) + strict usage conditions |
Expert View: Practical Tip for Compliance
Chartered Accountant Insight:
“Entities notified under Section 10(46A) must ensure every rupee is used only for public welfare and not diverted to unrelated commercial activities. If they fail, exemption may be withdrawn under Section 10(46A)(ii).”
This has serious implications—annual reporting under Form 10BB or other audit requirements may apply, depending on income size and nature.
Summary
CBDT has granted tax exemption under Section 10(46A) to NOIDA via Notification No. 116/2025. This move, effective AY 2024–25, supports industrial infrastructure growth in Uttar Pradesh. Only notified, non-profit public utility authorities are eligible under this newly introduced section.
FAQs
Q1. What is the benefit of income tax exemption under Section 10(46A)?
It helps development authorities like NOIDA retain more income for reinvestment in public infrastructure without paying income tax.
Q2. Does the exemption apply to NOIDA contractors or vendors?
No. The exemption applies only to NOIDA’s own income, not to payments made to private contractors or lessees.
Q3. Is the exemption automatic for all authorities?
No. Each entity must be notified individually by CBDT through an official notification.
Final Thoughts
The CBDT’s move to grant income tax exemption to NOIDA under Section 10(46A) is more than a tax relief—it’s a policy signal. As India pushes for manufacturing and urban growth, empowering statutory authorities like NOIDA with tax-free status could be a strategic lever.
Want help with income tax compliance, audit, or return filing under Section 139(4C)?
Talk to Efiletax today — your trusted partner in smart tax solutions.