Union Budget 2023: Income Tax Exemption For Development Authorities

It has been proposed to provide exemption to any income arising to a body or authority or board or trust or commission, (not being a company) which has been established or constituted by or under a Central or State Act with the purposes of satisfying the need for housing or for planning, development or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out commercial activity.

The Supreme Court in the case of Ahmedabad Urban Development Authority has held that the amounts or any money whatsoever charged for the public services are prima facie to be excluded from the mischief of business or commercial receipts as their objects are essential for advancement of public purposes/ functions.

In view of the decision of the Apex Court, it was proposed to amend the Act so as to exclude income of a body or authority or Board or Trust or Commission, not being a company, from the scope of clause (46) of section 10 and insert a new clause (46A) in section 10 for their income.

The new clause (46A) proposes to exempt any income arising to a body or authority or Board or Trust or Commission, not being a company, which has been established or constituted by or under a Central or State Act. The purpose of the establishment is in respect of dealing with and satisfying the need for housing accommodation; planning, development or improvement of cities, towns and villages; regulating, or regulating and developing, any activity for the benefit of the general public; or regulating any matter, for the benefit of the general public, arising out of the object for which it has been created.

These amendments will take effect from 1st April, 2024 and will accordingly apply to the assessment year 2024-25 and subsequent assessment years.

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