Circular 18 2017 PDF

CIRCULAR No.
18 /2017
F. No. 385/01l2015-IT (B)

Government ofIndial ~ '(H'fII{
Ministry of Finance/ fitfeP; '111'14
Department of Revenue/('(I<ltBl fct3l'm)
Central Board of Direct Taxes/(4)o=tIli ~'f><mt)
******
North Block, New Delhi
29 th May, 2017
Subject: Requirement of tax deduction at source in case of entities whose income is

exempted under Section 10 of the Income-tax Act, 1961 - Exemption thereof.
The Central Board of Direct Taxes (the Board) had earlier issued Circular No. 4/2002
dated 16.07.2002 and Circular No. 7/2015 dated 23 .04.2015 which laid down that in case of
such entities, whose income is unconditionally exempt under Section 10 of the Income-tax
Act (the Act) and who are also statutorily not required to file return of income as per Section
139 of the Act, there would be no requirement for tax deduction at source (TDS) from the
payments made to them since their income is anyway exempted from tax under the Act. The
issue of whether exemption from TDS can be extended to more entities on these principles
and whether the exemption is needed to be withdrawn in respect of some of the exempted
entities was examined by the Board.
2. Examination of the eligibility of entities for exemption from TDS on the principle of
unconditional exemption and no requirement to file return revealed that Circulars No. 4/2002
and 7/2015 are required to be updated to make the following changes:
• Entities that meet both the above mentioned conditions but are not mentioned in the
aforesaid Circulars need to be included in the list of exempted entities.
• Entities that are mentioned in Circular No. 4/2002 but their exemption from income
tax has since been withdrawn need to be removed from the list of exempted entities.
• Entities that are mentioned in Circular No. 4/2002 but because of subsequent
amendment they are now required to mandatorily file their returns of income U/S 139
need to be removed from the list of exempted entities.
3. In view of the above, a revised li st of entities exempted from TDS has been drawn by
adding entities in the first category listed above to the entities mentioned in Circular No.
4/2002 and Circular No. 7/2015 and removing entities in second and third categories from the
list of existing entities eligible for exemption from TDS.
4. Accordingly, it has been decided that in case of below mentioned funds or authorities or
Boards or bodies, by whatever name called, referred to in section 10 of the Income-tax Act,
whose income is unconditionally exempt under that section and who are also statutorily not
required to file return of income as per section 139 of the Income-tax Act, there would be no
0.385/01120 I 5-lTfB) Circu lar No. 18/2017
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requirement for tax deduction at source, since their income is anyway exempt under the
Income-tax Act -
(i) "local authority", as referred to in the Explanation to clause (20);
(ii) Regimental Fund or Non-public Fund established by the armed forces of the Union
referred to in clause (23AA);
(iii) Fund, by whatever name called, set up by the Life lnsurance Corporation of India on
or after I st August, 1996, or by any other insurer referred to in clause (23AAB);
(iv) Authority (whether known as the Khadi and Village Industries Board or by any other
name) referred to in clause (23BB);
(v) Body or authority referred to in clause (23BBA);
(vi) SAARC Fund for Regional Projects set up by Colombo Declaration referred to in
clause (23BBC);
(vii) lnsurance Regulatory and Development Authority referred to in clause (23BBE);
(viii) Central Electricity Regulatory Commission referred to in clause (23BBG);
(ix) Prasar Bharati referred to in clause (23BBH);
(x) Prime Minister's National Relief Fund referred to in sub-clause (i), Prime Minister' s
Fund (Promotion of Folk Art) referred to in sub-clause (ii), Prime Minister's Aid to
Students Fund referred to in sub-clause (iii), National Foundation for Communal
Harmony referred to in sub-clause (iiia), Swachh Bharat Kosh referred to in sub-
clause (iiiaa), Clean Ganga Fund referred to in sub-clause (iiiaaa) of clause (23C);
(xi) Provident fund to which the Provident Funds Act, 1925 (19 of 1925) referred to in
sub-clause (i), recognized provident fund referred to in sub-clause (ii), approved
superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to
in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25);
(xii) Employees' State Insurance Fund referred to in clause (25A);
(xiii) Agricultural Produce Marketing Committee referred to in clause (26AAB);
(xiv) Corporation, body, institution or association established for promoting interests of

members of Scheduled Castes or ScheduIed Tribes or backward classes referred to in
clause (26B);
No.385/01l2015-IT(B) Circular No. 18/2017
o
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(xv) Corporation established for promoting interests of members of a minority community

referred to in clause (26BB) ;
(xvi) Corporation established for welfare and economiC upliftment of ex-servicemen

referred to in clause (26888);
(xvii) New Pension System Trust referred to in clause (44).
4. This circular supersedes earlier Circulars on this issue e.g. Circular No. 4/2002 dated
16.07.2002 and Circular No. 712015 dated 23.04.2015 with effect from the date of issue of
this Circular.
5. Hindi version shall follow.
~\r\17
(San deep Smgh)
Under Secretary to the Govt. ofIndia
Tele: 2309 4182
Email: sandeep. [email protected]
I. Chairman , Members and all other officers of the Central Board of Direct Taxes.
2. Pro CCITI Pro DGITI CCITI DGIT with a request to circulate the same amongst all
officers in their Region 1 Charge.
3. Commissioner (Media & Technical Policy) and Official Spokesperson, CBDT.
4. Add!. Director General of Income-tax (PR, PP & OL)
5. Office of Comptroller & Auditor General of India.
6. ADG (Systems)-IV for uploading on the Departmental website.
7. Database Cell for uploading on the IRS Officers website.
8. Guard File.

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CIRCULAR No.

F. No. 385/01l2015-IT (B)

Subject: Requirement of tax deduction at source in case of entities whose income is

(i) "local authority", as referred to in the Explanation to clause (20);

(v) Body or authority referred to in clause (23BBA);

(vii) lnsurance Regulatory and Development Authority referred to in clause (23BBE);

(viii) Central Electricity Regulatory Commission referred to in clause (23BBG);

(ix) Prasar Bharati referred to in clause (23BBH);

(xii) Employees' State Insurance Fund referred to in clause (25A);

(xiii) Agricultural Produce Marketing Committee referred to in clause (26AAB);

(xiv) Corporation, body, institution or association established for promoting interests of

(xv) Corporation established for promoting interests of members of a minority community

(xvi) Corporation established for welfare and economiC upliftment of ex-servicemen

(xvii) New Pension System Trust referred to in clause (44).

5. Hindi version shall follow.

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