Telangana Pollution Control Board Gets Tax Exemption u/s 10(46)
In a recent notification, the Central Board of Direct Taxes (CBDT) granted income tax exemption to the Telangana State Pollution Control Board (TSPCB) under Section 10(46) of the Income-tax Act, 1961. This exemption, published via Notification No. 41/2025 dated 29.04.2025, ensures that specified income of the Board is not taxable, provided it adheres to listed conditions.
This article explains what this exemption means, its scope, and its legal foundation in simple terms.
What Is Section 10(46)? — A Quick Recap
Section 10(46) of the Income-tax Act, 1961 is a special exemption provision. It allows the Central Government, through CBDT, to notify statutory bodies, authorities, or boards as tax-exempt — but only for specific types of income and under clear conditions.
These authorities must:
- Be constituted under an Act of Parliament/State Legislature
- Perform public functions (e.g., health, pollution control, regulation, etc.)
- Not operate for profit
- Be notified specifically by the CBDT in the Official Gazette
It is not a blanket exemption — only specified income heads are exempt.
Income Tax Exemption for Telangana State Pollution Control Board
The CBDT, via Notification No. 41/2025-Income Tax [S.O. 1805(E)] dated 29.04.2025, granted exemption under Section 10(46) to the Telangana State Pollution Control Board (TSPCB).
Validity of Notification
- Applicable AYs: 2024–25 to 2028–29
- Expires after: FY 2027–28 (unless renewed)
What Income Is Exempt for TSPCB?
The notification clearly lists the following tax-exempt categories:
| Type of Income | Exempted Under Notification |
|---|---|
| Government Grants/Subsidies | ✅ Yes |
| Consent Fees and Charges for Environment | ✅ Yes |
| Interest on Deposits | ✅ Yes |
| Lease Rent from Land/Buildings | ✅ Yes |
| Sale of Pollution-Related Publications | ✅ Yes |
| Penalties and Compounding Fees (if retained by Board) | ✅ Yes |
| Miscellaneous Receipts (linked to statutory role) | ✅ Yes |
💡 Note: The exemption is conditional — applies only if income is used for statutory purposes.
Key Conditions to Maintain the Exemption
TSPCB must adhere to four key conditions laid down by CBDT:
- Maintain Separate Books:
Keep distinct accounting records for exempt income streams. - Utilisation Restriction:
Use income only for official purposes — not for private gain. - Investment Compliance:
Invest funds per Section 11(5) of the Act or other approved means. - Non-Commercial Clause:
The Board must not engage in any profit-making commercial activity.
Non-compliance may lead to withdrawal of exemption and retrospective tax liability.
Legal Basis & Official Link
- Notification No. 41/2025, issued by CBDT u/s 10(46)
- Published in The Gazette of India
- Official copy: View Notification on Incometaxindia.gov.in
Why This Matters — Policy Angle
This exemption fits into the broader trend of:
- Supporting autonomous statutory authorities
- Streamlining tax obligations for public welfare bodies
- Aligning with India’s environmental commitments under the Paris Agreement and SDG goals
Previously, similar exemptions have been granted to:
- CPCB (Central Pollution Control Board)
- State Water & Sewerage Boards
- Electricity Regulatory Commissions
- Statutory Universities & Public Health Boards
Expert View — Avoid Compliance Pitfalls
“Exemption under 10(46) is not automatic. Even a minor breach in fund usage or account separation can attract litigation. Authorities must stay audit-ready and policy-compliant,” says Priya Menon, Chartered Accountant at Efiletax.
CBDT’s Broader Strategy — Limiting Tax Disputes
In recent years, CBDT has been increasingly using Section 10(46) to pre-clear tax positions of non-profit regulatory bodies. This:
- Reduces compliance burden
- Prevents future litigation
- Encourages fiscal discipline in public bodies
Practical Takeaway for Other Authorities
If you’re managing a government-affiliated statutory body or board:
- You may be eligible for Section 10(46) exemption
- Must apply via your nodal Ministry to CBDT
- Ensure strict compliance with utilisation and accounting norms
Summary
CBDT has notified income tax exemption under Section 10(46) for the Telangana State Pollution Control Board. Income from grants, fees, interest, and other statutory sources is exempt from AY 2024–25 to 2028–29, subject to conditions. Exemption can be revoked if conditions are not followed.