Development authorities to get tax exemption

Development authorities, which have been set up by the Centre or states to provide housing and build or improve cities, towns and villages, will get tax exemption, irrespective of whether it is carrying out commercial activities.

This was announced in the Budget on Wednesday.

''It is 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,'' Finance Minister Nirmala Sitharaman said in her budget speech.

As per the memorandum of the Finance Bill, the government to introduce a new clause exempting 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, for the specified purposes.

These include 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 apply to the assessment year 2024-25 and subsequent assessment years.

The amendments follow a Supreme Court order dated October 19, 2022 in the case of Assistant Commissioner of Income-tax (Exemptions) vs Ahmedabad Urban Development Authority in Civil Appeal.

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