Section 10(26) of the Income Tax Act provides certain categories of individuals who are exempted from paying tax on their income. These categories of individuals are known as “specified persons.” The provisions of this section are applicable to both resident and non-resident specified persons.
Who are Specified Persons?
Specified persons are individuals who belong to certain categories as prescribed by the Income Tax Act. The following are the categories of individuals who are considered specified persons under Section 10(26):
- Members of Scheduled Tribes
Individuals belonging to Scheduled Tribes as specified in the Constitution of India are considered specified persons under this section.
- Members of Scheduled Castes
Individuals belonging to Scheduled Castes as specified in the Constitution of India are considered specified persons under this section.
- Members of Backward Classes
Individuals belonging to Backward Classes as specified by the Central Government are considered specified persons under this section.
- Members of Certain Minority Communities
Individuals belonging to certain minority communities such as Sikhs, Jains, Buddhists, and Zoroastrians (Parsis), are considered specified persons under this section.
- Individuals from the North Eastern States
Individuals who are residents of the North Eastern States, including Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, are considered specified persons under this section.
- Members of the Armed Forces
Individuals who are members of the Armed Forces of the Union, including the Army, Navy, and Air Force, are considered specified persons under this section.
- Former Rulers
Individuals who were formerly recognized as rulers of Indian States are considered specified persons under this section.
- Members of Local Authorities
Individuals who are members of local authorities such as Municipal Corporations, Municipalities, and Panchayats are considered specified persons under this section.
Tax Exemptions for Specified Persons
Specified persons are exempted from paying tax on their income earned from any source. This exemption is applicable to all types of income, including salary, business income, capital gains, and other sources of income.
However, it is important to note that this exemption is not applicable to income earned from any business or profession carried out by the specified person outside the specified area. For instance, if a member of a Scheduled Tribe runs a business outside the Scheduled Area, the income earned from that business will not be exempted from tax under this section.
As mentioned earlier, the exemption provided under Section 10(26) of the Income Tax Act is applicable to all types of income earned by specified persons within the specified areas. These areas are typically defined by the government and may vary depending on the category of the specified person.
For instance, for members of Scheduled Tribes, the specified areas may include certain districts or regions that are predominantly inhabited by members of Scheduled Tribes. Similarly, for individuals from the North Eastern States, the specified areas may include the entire region or certain districts within the region.
It is important to note that the exemption provided under Section 10(26) is not automatic, and specified persons are required to furnish a declaration to the tax authorities in order to claim this exemption. The declaration should include details such as the category of the specified person, the specified area, and other relevant information.
If a specified person earns income from sources outside the specified area or carries out a business or profession outside the specified area, the income earned from such sources will not be exempted from tax under Section 10(26). In such cases, the specified person will be required to pay tax on the income earned from such sources.
It is also worth noting that the tax exemption provided under Section 10(26) is in addition to other tax benefits and deductions that may be available to specified persons under other provisions of the Income Tax Act. For instance, specified persons may be eligible for deductions under Section 80C for investments made in specified instruments, such as life insurance, provident fund, and equity-linked savings schemes.
In conclusion
Section 10(26) of the Income Tax Act provides tax exemptions to specified persons belonging to certain categories. The exemption is applicable to all types of income earned by these individuals within the specified areas. However, in order to claim this exemption, specified persons are required to furnish a declaration to the tax authorities. It is important for specified persons to understand the provisions of this section in order to effectively utilize the tax benefits provided under it.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
Q. Who are considered specified persons under Section 10(26) of the Income Tax Act?
Specified persons are individuals who belong to certain categories as prescribed by the Income Tax Act. The categories of individuals who are considered specified persons under Section 10(26) include members of Scheduled Tribes, members of Scheduled Castes, members of Backward Classes, members of certain minority communities, individuals from North Eastern States, members of the Armed Forces, former rulers, and members of local authorities.
Q. What is the tax exemption provided under Section 10(26)?
The tax exemption provided under Section 10(26) of the Income Tax Act is applicable to all types of income earned by specified persons within the specified areas. These areas are typically defined by the government and may vary depending on the category of the specified person. The exemption is not automatic, and specified persons are required to furnish a declaration to the tax authorities in order to claim this exemption.
Q. Is the tax exemption under Section 10(26) applicable to income earned outside the specified areas?
No, the tax exemption provided under Section 10(26) is only applicable to income earned by specified persons within the specified areas. If a specified person earns income from sources outside the specified area or carries out a business or profession outside the specified area, the income earned from such sources will not be exempted from tax under Section 10(26).
Q. What is the process for claiming the tax exemption under Section 10(26)?
Specified persons are required to furnish a declaration to the tax authorities regarding their status as a specified person in order to claim the tax exemption under Section 10(26). The declaration should include details such as the category of the specified person, the specified area, and other relevant information.
Q. Are specified persons eligible for other tax benefits and deductions under the Income Tax Act?
Yes, specified persons may be eligible for other tax benefits and deductions under other provisions of the Income Tax Act. For instance, specified persons may be eligible for deductions under Section 80C for investments made in specified instruments, such as life insurance, provident fund, and equity-linked savings schemes.
Q. Is the tax exemption under Section 10(26) applicable to both resident and non-resident specified persons?
Yes, the tax exemption provided under Section 10(26) is applicable to both resident and non-resident specified persons. However, the exemption is applicable only to income earned within the specified areas.
