Introduction: The Ministry of Finance, through the Central Board of Direct Taxes, has issued a notification under section 10(46) of the Income-tax Act, 1961, pertaining to the Karnataka Urban Water Supply and Drainage Board. This article provides insights into the notification’s provisions, its impact, and the specified incomes covered under it.
Detailed Analysis: The notification designates the Karnataka Urban Water Supply and Drainage Board, established under the Karnataka Urban Water Supply and Drainage Board Act, 1973, as eligible for tax exemption under clause (46) of section 10 of the Income-tax Act. Specified incomes covered by this notification include establishment, administrative, supervision, water charges, rent, forfeiture of earnest money deposit, penalties, sale of scrap, storage charges, survey charges, and interest earned on bank deposits.
However, certain conditions must be met for the notification’s applicability. The Board must refrain from engaging in commercial activities, ensure that its activities and specified incomes remain unchanged throughout financial years, and file income tax returns as per the provisions of the Income-tax Act.
Additionally, the notification is deemed applicable for assessment years 2021-2022, 2022-2023, and 2023-2024, corresponding to the financial years 2020-2021, 2021-2022, and 2022-2023, respectively. This retrospective effect aims to provide clarity and consistency in tax treatment for the specified incomes of the Karnataka Urban Water Supply and Drainage Board.
Conclusion: The Income Tax Act notification regarding the Karnataka Urban Water Supply and Drainage Board delineates the specified incomes eligible for tax exemption under section 10(46). By understanding the notification’s provisions and conditions, the Board can ensure compliance while leveraging tax benefits. This notification underscores the government’s efforts to streamline tax regulations and support essential public service entities like the Karnataka Urban Water Supply and Drainage Board.
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MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
New Delhi
Notification No. 26/2024-Income Tax | Dated: 1st March, 2024
S.O. 1000(E).—In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘Karnataka Urban Water Supply and Drainage Board’ (PAN: AAATK5837F), a Board constituted under the Karnataka Urban Water Supply and Drainage Board Act, 1973 (Karnataka Act No. 25 of 1974), in respect of the following specified income arising to that Board, namely:
(a) Establishment, administrative, supervision, water charges and rent collected as per the Karnataka Urban Water Supply and Drainage Board Act, 1973 (Karnataka Act No. 25 of 1974);
(b) Forfeiture of earnest money deposit as per the Karnataka Urban Water Supply and Drainage Board Act, 1973 (Karnataka Act No. 25 of 1974);
(c) Penalty, Sale of Scrap, Storage charges and Survey charges as per the Karnataka Urban Water Supply and Drainage Board Act, 1973 (Karnataka Act No. 25 of 1974) and
(d) Interest earned on bank deposits.
2. This notification shall be effective subject to the conditions that Karnataka Urban Water Supply and Drainage Board-
(a) shall not engage in any commercial activity;
(b) activities and the nature of the specified income shall remain unchanged throughout the financial years; and
(c) shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961.
3. This notification shall be deemed to have been applied for assessment years 2021-2022, 2022-2023 and 2023-2024 relevant for the financial years 2020-2021, 2021-2022 and 2022-2023, respectively.
[Notification No. 26/2024/F. No. 300196/12/2019-ITA-I]
CASTRO JAYAPRAKASH T., Under Secy.
Explanatory Memorandum
It is certified that no person is being adversely affected by giving retrospective effect to this notification
