NOIDA authority given income tax exemption: How it benefits you?
What's the story
The Central Board of Direct Taxes (CBDT) has granted an income tax exemption to the New Okhla Industrial Development Authority (NOIDA), under Section 10(46A) of the Income Tax Act. The relief, effective from Assessment Year 2024-25, is aimed at statutory public utility authorities like NOIDA that undertake non-commercial activities for public benefit. The exemption covers income from rents, fees, as well as government grants used for public services like urban planning and housing.
Impact
Benefits for residents and businesses
The tax exemption is likely to benefit residents by improving civic infrastructure such as roads, housing, and drainage. Experts believe that NOIDA could reinvest its tax savings into local development projects. For businesses, the exemption could lead to faster project clearances and improved services in industrial zones. However, it's important to note that commercial income from activities such as real estate sales or for-profit ventures will continue to be fully taxable.
Compliance
Exemption subject to conditions
The tax exemption isn't permanent. NOIDA is required to maintain separate accounts for its exempt and non-exempt income. If there is any overlap or misuse, the entire exemption could be revoked. This condition is in line with CBDT guidelines, which state that transparency and compliance are key to maintaining this "tax-free" status.
Others
Similar benefits given to sovereign wealth funds
The exemption is part of a larger push by the Indian government to promote tax-efficient urban planning. Similar benefits have been given in recent years to sovereign wealth funds and pension funds investing in infrastructure projects.