Income Tax Exemption Granted to Ayodhya Vikas Pradhikaran: A Key Boost for Urban Development
The Central Board of Direct Taxes (CBDT) has issued Notification No. 159/2025 dated November 7, 2025, granting income tax exemption to Ayodhya Vikas Pradhikaran (Ayodhya Development Authority) under Section 10(46A)(b) of the Income-tax Act, 1961, effective from Assessment Year 2024-25.[1][2]
Understanding the Notification and Its Scope
The Ministry of Finance, through the CBDT, exercised powers under sub-clause (b) of clause (46A) of Section 10 to notify Ayodhya Vikas Pradhikaran, bearing PAN AAALA0206C, as an eligible authority.[2] This authority, constituted under the Uttar Pradesh Urban Planning and Development Act, 1973 (President’s Act 11 of 1973), focuses on urban planning and development in Ayodhya.[1][2]
The exemption applies to specified incomes derived by the authority, provided it continues to operate for purposes outlined in sub-clause (a) of clause (46A), such as urban infrastructure and public welfare activities.[2] The notification carries retrospective effect from AY 2024-25, with an explanatory memorandum certifying that no individual or entity is adversely affected.[1][2]
Key Conditions for Eligibility
- The assessee must remain constituted under the 1973 Act.
- It must pursue one or more purposes specified in Section 10(46A)(a).
- Compliance ensures continued tax-exempt status on qualifying income.[2]
This move aligns with similar exemptions granted to other public bodies, like the Haryana Building and Other Construction Workers Welfare Board under a parallel notification.[1][6]
Significance of Section 10(46A) for Development Authorities
Section 10(46A) empowers the Central Government to exempt income of certain authorities engaged in public welfare, infrastructure, and regulatory functions.[1] For Ayodhya Vikas Pradhikaran, this exemption is particularly timely amid Ayodhya’s rapid urban transformation following the Ram Temple consecration and ongoing development projects.
By relieving the authority from tax liabilities on relevant incomes, the government enhances fiscal space for critical initiatives like road networks, housing, and amenities.[1] This supports the broader vision of making Ayodhya a model smart city, attracting investments without tax burdens hindering progress.
Comparison with Section 10(46)
- Section 10(46): Typically for statutory bodies with specified non-taxable incomes like fees and grants.
- Section 10(46A): Tailored for urban planning authorities, emphasizing development objectives.[1]
Both provisions underscore the government’s strategy to bolster entities driving national priorities through tax incentives.[1]
Implications for Stakeholders and the Economy
For Ayodhya Vikas Pradhikaran, the exemption means streamlined finances, enabling accelerated execution of master plans and sustainable urban growth.[1][2] Tax professionals and consultants advising such authorities must now update compliance strategies, ensuring adherence to conditions to avoid revocation.
From an economic standpoint, this fosters public-private partnerships in Ayodhya, boosting tourism, real estate, and employment. It signals policy continuity in supporting culturally significant regions’ development, potentially setting precedents for other heritage cities.[1]
Practical Steps for Compliance
- Review PAN and authority status alignment with the 1973 Act.
- Maintain records of income sources qualifying for exemption.
- Monitor CBDT updates for any amendments or additional conditions.[2]
Chartered Accountants play a pivotal role in guiding these bodies through filings, leveraging the retrospective effect without adverse impacts.[1][2]
In summary, this notification exemplifies targeted fiscal policy aiding urban renewal. As Ayodhya evolves, such exemptions ensure resources are channeled effectively for public good, reinforcing India’s infrastructure ambitions. Professionals should access the official gazette for full details and advise clients proactively.[1][2]
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