A critical analysis of Section 10(26) of Income Tax Act 1961
Introduction:
Section 10(26) of Income Tax Act 1961 says
“In the case of a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971 (81 of 1971) or in the Ladakh region of the State of Jammu and Kashmir, any income which accrues or arises to him,—
(a) from any source in the areas or States aforesaid, or
(b) by way of dividend or interest on securities;
Meaning of Scheduled Tribe:
Scheduled Tribes means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this Constitution;
Article 342 in The Constitution of India 1949 says
(1) The President may with respect to any State or Union territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the tribes or tribal communities or parts of or groups within tribes or tribal communities which shall for the purposes of this Constitution be deemed to be Scheduled Tribes in relation to that State or Union territory, as the case may be
(2) Parliament may by law include in or exclude from the list of Scheduled Tribes specified in a notification issued under clause (1) any tribe or tribal community or part of or group within any tribe or tribal community, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent Notification Part XVII Official Language Chapter I Language Of The Union
Meaning of Tribal Areas
(1) Areas inhabited by tribal in the state of of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura
or
The areas specified in Parts 1, II, IIA and III of the table below shall respectively be the tribal areas within the State of Assam, the State of Meghalaya, the State of Tripura and the State of Mizoram.
(2) Any reference in Part I, Part II or Part IIA, Part III of the table below to any district shall be construed as a reference to the territories comprised within the autonomous district of that name existing immediately before the day appointed under clause (b) of section 2 of that North-Eastern Areas (Reorganization) Act, 1971:
PART I
1. The North Cashar Hills District.
2. The Karbi Anglang District.
PART II
1. Khasi Hills District.
2. Jaintia Hills District.
3. The Garo Hills District.
PART IIA Tripura Tribal Areas District.
PART III
1. The Chakma District
2. The Mara District.
3. The Lai District.
or
In the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the governor of Assam.
Or
In the Ladakh region of the State of Jammu and Kashmir,
Gist of The Above Discussion
The income of the tribals of North Easter India and ladakh will be exempted from income tax if the persons fulfills all the below three conditions simultaneously:
(i) He should be a member of Scheduled Tribe as defined in clause (25) of article 366 of the Constitution; and
(ii) He should be residing in the specified tribal areas and
(iii) The income in respect of which exemption is claimed must be an income which accrues or arises to him-
a) from any source in the area, State or Union territories mentioned in the provision, or
b) by way of dividend or interest on securities.
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CA NITISH AGARWALLA | [email protected]
Author Bio
I availed exemption under IT Act sec 10(26) in the past, being domicile of Manipur and Schedule Tribe. Now that I am being posted in Leh, kindly advice whether I can avail the same exemption or otherwise please. I believe that many people are also having the same query and not knowing how to go about
In my humble opinion since Leh is part of Ladakh region therefore you may avail the exemption. Still please consult your tax consulatant for any latest update.
I am resident of Ladakh (scheduled Tribe) and retired in 2022 from UT of J&K . Are my pension dues exempted from income tax irrespective of fact that treasury/ Bank from which I receive pension is outside the Ladakh UT. Alternative, shall i need to transfer my Treasury/Bank Account to Ladakh region. Kindly clarify
how to file form 13 for salary schedule tribe that she/he didn’t deducted tds 1st time employment.
how to fill tan no. of form 13
sir, I’m ST of Arunachal pradesh and working in Itanagar. but I’m getting ITR filing message and mail from income tax. Is it necessary to file ITR even if I’m exempted from income tax???
I am central govt employee and posted in North East Region. I am from Odisha and belong Schedule Tribe. Whether I am fully exempted from from Income Tax
in NE region Agaratala all central employees are exempted from Income Tax, Whether they are belong North India Tribal area as ST. please provide details
I’m from the Khasi Hills, which is listed under ST and, my question is if I had a YouTube channel and only took money from the adsense, and one person has told me that I would only have to pay ITR but since I’m under ST does that mean that I don’t have to pay income tax?
Greetings dear sir, i am a scheduled tribe residing in Mizoram, working in the stock market. [1]If I plan to stay in Bangalore for the next 6months and trade from there, then will i need to pay income tax? [2]And also sir, what could be the duration of stay in places of Income Tax , from when I will start to be considered eligible to pay Income Tax. Is it immediate or is there an after period of stay?
Stay in Banglore will be treated residing outside tribal area and will be taxable immediately
I am a scheduled tribes from Rajasthan and working and residing in Nagaland. I am exempted from Income Tax.
Thank You for the article/blog. It was very informative.
Also great answers from the comments.
Nitish ji,
As per the description of law its written ” Income from any source is exempted” So whether a long term capital gain arising to a tribal person from sale of his ancestral property situated in a tribal area is exempted from tax.
Audit is not required plz refer ITAT judgment ACIT Magnum Fund, better to file ITR
yes it will be exempted
Dear Sir,
Wanted to know is ST of Tripura exempted from TDS in Shillong, Meghalaya
Hi Mr Nitish, I have taken the liberty to reach out to the experts regarding a query that I had regarding my income tax and audit compliances of my business. I am a resident of Imphal, Manipur belonging to the ST, I have businesses in Imphal with a turnover of over 1CR, as per Section 10(26) of Income-tax act 1961, tribals fulfiling the criterion of the act is not liable to pay any income tax to the Gov. However my CA implied that I have to file income tax and do audits for my business even if I don’t have to pay tax, but this is costing me a large sum as fees hence I would like to know if it is really a mandatory action that needs to be taken in regards to my tax filing and audit. I would be grateful if you can give me your insight on this, thanks and regards
If i’m STH and permanent resident of Cachar district of ASSAM, but working and residing in North Cachar Hills autonomous council. Will i get income Tax exception?
Based on my understanding not all tribel central employees posted in all the areas of Assam are exempted. It covers only a few areas of Assam.can you please tell me the areas which are exempted.
is Kamru district under the said area.
No. Only sixth schedule area.
I belong to Indian Forest Service which is All India Service. I am working in Bangalore, Karnataka and paying income tax. I want to go on VRS and to settled in my native place Arunachal Pradesh. Whether I need to pay Income tax on my pension amount? Please enlighten on this issue.
Plz mail me the details in [email protected]
You are not liable to pay income tax at that time.
I am ST from West Bengal and working currently at Gangtok. I am eligible for 10(26) and if yes then how to avail(apply) it ?
Dear Sir,
May I know if an employee who belongs to ascheduled tribe of northeastern state of Manipur/ but working in Assam so, will he or she be exempted from paying govt tax??
Only some parts of assam are exempted, depends in which place of assam working
Dear Sir, I am from Assam (North Cachar Hills) belonging to ST Category working in Guwahati . Can I apply for Income tax exemption? If yes ,kindly advise me the process.
In my opinion since you are working in ghy you are not exempted
Sir, last year 2020-21, I filed itr for some purpose. This year I receiving sms and email telling me to file itr for 2021-22. I am from Nagaland and belong to ST category. Do I have to file itr? If I don’t, will I be fined? Thank you
Regarding filling ITR please refer section 139 of income tax act
Sir, i am ST residing in mizoram. I do stock market trading, selling, buying of shares from mizoram. Are capital gains from stock market trading exempted from income tax? Will I get notice if I don’t file ITR?
In my opinion it will be exempted regarding filing ITR please refer section 139
sir I’m a tribal residing in Meghalaya. I hve mutual fund investments. I would like to know if my short term and long term capital gains will be taxed or not. im I liable for taxation or am I exempted.
Dear sir
I know from ur blog that the income tax in areas of 6th sch for the working members belonged to that ST group are exempted from 80 c . Do I have to pay capital tax on short term or long capital gain from selling or investing in share market profit?
In my opinion if you are trading from the Tribal areas it will be exempted. Please consult your CA/Tax advisor before taking any decision.
Sir, I am Central Govt PSUE employee, belongs to Rajasthan and I am in ST category and working in Arunachal Pradesh in a hydro sector and residing there. Whether I will be exmpted from Income Tax?
In my opinion it wont be exempted
Does the assessee need to get any exemption certificate from Income Tax for claiming such exemption?
NO
Sir,
I have domicile of Arunachal Pradesh and working in North East Region as Central Govt Employee. Am I eligible for tax exemption under Section 10(26)
If u are ST and working in AP then exempted
If a scheduled tribe freelancer reside & works from his home town which is a tribal area listed, and earns income from online businesses such as blogging, web design, etc , then his income is exempted u/s 10(26) of the income tax act?
Please let me know….
I belive it will be exempted
sir how to apply sec 10 (26) in income tax refurn filing online
Are tribal people exempted from the income they earn from stock market
As per my understanding If the trading is done from tribal areas then I believe it will be exempted, otherwise not.
Dear Nitish,
I am a permanent resident of Sixth schedule District Karbi Anglong. I am working as an Area Manager supervising 12 districts of Assam including Karbi Anglong and West Karbi Anglong. However, I have not been posted in any particular district and therefore designated as Area Manager of Central Assam.
Am I eligible for TDS exemption? Request you kindly to shed some light on this regard.
Thank you.
TDS exemptions and income tax exemptions both are different topics, first you have to come to the conclusion whether you are exempted from income tax?, then your question related to tds exemption can be answered.
If I am exempted from Income Tax u/s 10(26), does that imply I am exempted from TDS provisions also ?
I am Scheduled Tribe (Sub tribe Orson) of Jharkhand State. Now, I got transfer to Aizwal, Mizoram. Please inform me whether I am eligible for exempted Income tax.
In my opinion you will not eligibile u/s 10(26), however please conusult your tax consultant before coming to any conclusion.
If a tribal satisfy all the conditions u/s 10(26) and incorporate a Pvt Ltd Company with all the directors being tribal, then will the income of the company be exempt u/s 10(26)
It will not be exempted
Are Capital Gains on Stocks exempted for ST residing in Tribal area?
I am a tribal from Tripura. My main source of income is from Youtube, Google adsense. Am I exempted or have to pay income taxes? Also, I am still living under my parents roof.
In my opinion it will be exempted.
Thanks for the reply Sir. In case I have to pay, will I get notified??
Sir,
If a ST from Assam is posted in Arunachal Pradesh. Will he be exempted from Tax?
If the ST is a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, then yes.
A tribal central government employee of Manipur posted in the state of Nagaland. However, the person concerned in recognised as a Scheduled Tribe in Manipur. In the state of Nagaland he is not recognised as a ST. Whether that person is exempted from paying income tax or not?
If he is a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, then exempted.
One Doubt:
Many Central Government employees who are scheduled Scheduled Tribes and domiciled of Nagaland, Manipur and presently posted in Sikkim or other States outsides NE are submitting application that they are exempted under Income Tax. But is is not clear whether income earned from salary in respect of Central Government employees when posted in Sikkim or outside NE is exempted or otherwise. Kindly interpret and enlighten the rule position.
Tribals posted outside NE won’t be exempted. To be exempted they must satisy all the conditions u/s10(26)
Income earned from salary in respect of Central Government employees when posted outside NE is not exempted.
Based on my understanding, not all Tribal Central Employees posted in all the areas of Assam are exempted. It covers only a few areas of Assam. Can you please tell me the areas which are exempted?
Is Tezpur, Sonitpur District under the said area?
Tezpur and sonitpur in my opinion are not exempted area