Understanding Section 10(18) of the Income Tax Act: Tax Exemption for Scheduled Tribes in India

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Section 10(18) of the Income Tax Act is a provision that exempts certain incomes earned by a member of a Scheduled Tribe residing in specified areas from tax. The provision was introduced to promote the social and economic development of Scheduled Tribes living in remote and underdeveloped areas of the country.

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What is a Scheduled Tribe?

Scheduled Tribes are indigenous people of India who are recognized as such by the Constitution of India. They are classified as Scheduled Tribes on the basis of certain criteria, such as a distinctive culture, language, and customs. There are over 700 Scheduled Tribes in India, with a combined population of over 100 million.

Who is eligible for the exemption under section 10(18)?

The exemption under section 10(18) is available to a member of a Scheduled Tribe who resides in any area declared as a “Scheduled Area” under the Fifth Schedule of the Constitution of India or any area declared as a “Tribal Area” under the Sixth Schedule of the Constitution of India.

What incomes are exempt under section 10(18)?

The following incomes earned by a member of a Scheduled Tribe residing in a Scheduled Area or a Tribal Area are exempt under section 10(18):

  1. Any income from any source in the form of any grant, aid, or financial assistance received from the Central Government or a State Government or any body or authority established by the Central or State Government for the purposes of upliftment of the Scheduled Tribes.
  2. Any income from any source in the form of any scholarship, stipend, or similar payment given to a student who is a member of a Scheduled Tribe to enable him or her to pursue his or her education.
  3. Any income from any source in the form of any subsistence allowance, travelling allowance, or other similar payment given to a member of a Scheduled Tribe to enable him or her to undertake any journey or to perform any duties or functions in connection with his or her tribal community or tribal area.
  4. Any income from any source in the form of any compensation or award given to a member of a Scheduled Tribe in connection with any dispute or legal proceeding relating to his or her rights or interests as a member of a Scheduled Tribe.

It is important to note that the exemption under section 10(18) applies only to the specified incomes earned by a member of a Scheduled Tribe residing in a Scheduled Area or a Tribal Area. Any other income earned by such a person will be subject to the normal provisions of the Income Tax Act.

The objective behind section 10(18) is to provide economic relief and assistance to the tribal communities of India, which have been historically marginalized and underdeveloped. The income tax exemption helps to provide financial support to members of these communities and encourage them to pursue education, undertake travel, or perform their duties and functions for their communities without having to worry about the tax burden.

In addition to the exemption of income, members of Scheduled Tribes residing in Scheduled Areas or Tribal Areas are also eligible for certain other benefits under various government schemes and programs. These benefits include education scholarships, healthcare services, housing subsidies, and job reservations in certain sectors. The combined effect of these benefits and provisions is aimed at promoting the social and economic development of the tribal communities and improving their overall standard of living.

It is worth noting that the scope of section 10(18) is limited to members of Scheduled Tribes residing in Scheduled Areas or Tribal Areas. Therefore, individuals belonging to other communities, even if they live in the same area, may not be eligible for the exemption. Additionally, the exemption applies only to the specified incomes earned by members of Scheduled Tribes and not to their entire income. Thus, other incomes earned by these individuals, such as from non-specified sources or businesses, will be taxed as per the regular provisions of the Income Tax Act.

In conclusion

Section 10(18) of the Income Tax Act is a provision that aims to promote the social and economic development of Scheduled Tribes living in Scheduled Areas or Tribal Areas by providing tax exemption on certain specified incomes. The provision is part of a broader set of government initiatives aimed at improving the overall standard of living of tribal communities in India. By providing economic relief and support, the provision helps to ensure that members of Scheduled Tribes have access to the financial resources needed to pursue education, perform their duties, and participate in the overall development of their communities.

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Frequently Asked Questions (FAQs)

Q. Who is eligible for the tax exemption under Section 10(18)?
Ans: The tax exemption under Section 10(18) is available to any member of a Scheduled Tribe residing in a Scheduled Area or a Tribal Area.

Q. What types of incomes are exempt under Section 10(18)?
Ans: The following types of incomes are exempt under Section 10(18):

  • Any grant, aid or financial assistance received from the Central Government or a State Government or any body or authority established by the Central or State Government for the purposes of upliftment of the Scheduled Tribes.
  • Any scholarship, stipend or similar payment given to a student who is a member of a Scheduled Tribe to enable him or her to pursue his or her education.
  • Any subsistence allowance, travelling allowance or other similar payment given to a member of a Scheduled Tribe to enable him or her to undertake any journey or to perform any duties or functions in connection with his or her tribal community or tribal area.
  • Any compensation or award given to a member of a Scheduled Tribe in connection with any dispute or legal proceeding relating to his or her rights or interests as a member of a Scheduled Tribe.

Q. What is a Scheduled Area?
Ans: A Scheduled Area is an area that has been declared as such under the Fifth Schedule of the Constitution of India. It is an area where Scheduled Tribes are the predominant community, and the administration of such an area is governed by special provisions under the Constitution.

Q. What is a Tribal Area?
Ans: A Tribal Area is an area that has been declared as such under the Sixth Schedule of the Constitution of India. It is an area where certain tribal communities have autonomy over the administration of such an area.

Q. Is the entire income of a member of a Scheduled Tribe residing in a Scheduled Area or a Tribal Area exempt from tax under Section 10(18)?
Ans: No, only the specified incomes mentioned under Section 10(18) are exempt. Any other income earned by such individuals will be taxed as per the regular provisions of the Income Tax Act.

Q. How does the tax exemption under Section 10(18) benefit members of Scheduled Tribes?
Ans: The tax exemption under Section 10(18) helps provide financial assistance and support to members of Scheduled Tribes residing in underdeveloped areas, enabling them to pursue their education and perform their duties and functions for their communities without the burden of taxes. It also helps to promote the overall economic development of their communities.

Q. Can individuals belonging to other communities residing in Scheduled Areas or Tribal Areas avail of the tax exemption under Section 10(18)?
Ans: No, only members of Scheduled Tribes residing in Scheduled Areas or Tribal Areas are eligible for the tax exemption under Section 10(18).

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