Income tax exemption of STs subject to conditions, says IT official

MOKOKCHUNG — D A J Sawkmie, Principal Commissioner of Income Tax, Shillong, said that while scheduled tribes (STs) are exempt from paying income tax, it is only under a special provision of Section 10(26) of the Income Tax Act 1961 and subject to certain conditions.

He mentioned this during an interactive outreach programme organised by the Office of the Principal Chief Commissioner of Income Tax, North East Region (NER), Guwahati, held on Monday at the conference hall of the deputy commissioner in Mokokchung. Representatives from NGOs, the business community, and district entrepreneurs were present at the event.

He explained that income sources arising from or accumulated in states or areas specified in Section 10(26) of the Income Tax Act, as well as dividends or interest on securities, are exempt from income tax.

He also noted that the exemption does not apply to income such as rental income from immovable property located outside the specified areas or income from any business activity conducted outside those areas.

Sawkmie stated that the key features of the exemption are that an individual must be an ST residing in the Sixth Schedule areas of the northeastern states, as well as in the tribal states of Nagaland and Ladakh Union Territory. He also added that certain tribal areas of Assam are included in the exemption.

He also advised the participants that they could claim tax exemption under Section 10(26) by filing an income tax return. As the exemptions are income-based, they must disclose both the income generated and the corresponding exemption.

He asserted that there are many grey areas under Section 10(26) of the Income Tax Act where only a court judgement can provide a definitive answer.

Principal Chief Commissioner of Income Tax, NER, Chaitali Panmei, said in her speech that the outreach programme aimed to educate the ST-dominated regions of the northeast about various initiatives taken by the Income Tax department.

She, however, lamented that many people are unaware of how to utilise the provision for the ST population, resulting in situations where the IT department must resort to measures such as deducting from personal bank accounts or seizing property.

In this regard, she urged the participants to understand how to comply with the provisions of the IT Act and take advantage of the tax exemption benefit under Section 10(26).