Income Tax Exemption under Section 10(46) for Three Key Institutions
The CBDT has granted income tax exemptions under Section 10(46) of the Income-tax Act, 1961 to three public institutions — Haryana State Pollution Control Board (HSPCB), All India Council for Technical Education (AICTE), New Delhi, and West Bengal Municipal Development Fund Trust (WBMDT).
These exemptions were notified via official CBDT Notifications in July 2025 and are effective for specific types of income earned by these entities.
Let’s break down what it means, and how Section 10(46) works.
What is Section 10(46) of Income-tax Act?
Section 10(46) provides income tax exemption to specified bodies or authorities, especially government-backed ones, for notified categories of income. The aim is to support institutions performing public functions by relieving them of tax burdens on non-commercial receipts.
Institutions Notified for Exemption (July 2025)
Here are the latest organisations granted exemption:
| Institution | Notification No. | Date |
|---|---|---|
| Haryana State Pollution Control Board (HSPCB) | 51/2025 | 24-07-2025 |
| All India Council for Technical Education (AICTE), New Delhi | 52/2025 | 24-07-2025 |
| West Bengal Municipal Development Fund Trust (WBMDT) | 53/2025 | 24-07-2025 |
Types of Income Exempted under Section 10(46)
The CBDT has specified the following categories of income for each of the three institutions as exempt:
- Grants received from Government
- Interest income from savings and fixed deposits
- Receipts from consultancy, training or project management fees (AICTE & HSPCB)
- Penalty or fines collected for statutory purposes (HSPCB)
- Sale of publications and information dissemination material
- Any income arising from the function assigned under relevant State or Central Acts
Important: Commercial activity income, if any, remains taxable unless separately notified.
Key Conditions for Claiming Exemption
To avail the benefit of Section 10(46) income tax exemption, each institution must:
- Maintain separate books of accounts for exempted income
- Not engage in commercial activity
- Use income solely for public utility purposes
- File return of income (if otherwise applicable) to disclose exempt income
- Ensure exemption applies only to the specified period (usually FY 2024–25 to FY 2028–29, as per notification)
Expert Tip:
If your institution falls under any government authority or trust doing public service, you can apply for exemption u/s 10(46) by sending a proposal to CBDT through the concerned Ministry or State Government.
The process requires:
- A detailed income and activity report
- Compliance with Rule 2BBA of Income-tax Rules
- Non-profit nature of operations
Read more on official Income Tax India site.
Why This Exemption Matters
This exemption:
- Reduces compliance burden on institutions engaged in public services
- Promotes funding and transparency for environmental, educational, and municipal development efforts
- Encourages non-commercial governance frameworks without fear of tax litigation
Internal Link
Want to know how to claim income tax exemption for charitable trusts?
Read our guide on Section 12AB registration →
Final Words
The CBDT’s latest notifications under Section 10(46) reaffirm its support for public service institutions. These exemptions are not automatic — they are granted only to notified bodies for specified incomes and periods.
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FAQ: Section 10(46) Income Tax Exemption
Q1. Can any trust apply under Section 10(46)?
No. Only government-backed bodies or institutions notified by CBDT are eligible.
Q2. What’s the difference between 10(23C) and 10(46)?
Section 10(23C) applies to educational or medical institutions and charitable trusts. Section 10(46) applies only to government-specified bodies.
Q3. Does this exemption need annual renewal?
No, but it applies only for the period mentioned in the CBDT notification. Post expiry, re-notification is required.
Q4. Is income from commercial consultancy exempt?
No. Only notified types of income get exemption. Commercial profits remain taxable unless otherwise stated.
Summary
CBDT has granted Section 10(46) income tax exemptions to HSPCB, AICTE, and WB Municipal Fund Trust. The exemptions apply only to specified incomes like government grants and interest, not commercial profits. Institutions must maintain proper records and comply with usage conditions.