Section 10(23BBF) of the Income Tax Act provides a phased tax exemption for the North-Eastern Development Finance Corporation Ltd. (NEDFi)—a company formed under the Companies Act, 1956, to promote economic development in the North-Eastern region of India.
Exemption Timeline:
The exemption was structured to gradually increase over five assessment years:
- 20% of income exempt for AY 2006–07
- 40% exempt for AY 2007–08
- 60% exempt for AY 2008–09
- 80% exempt for AY 2009–10
- 100% exempt from AY 2010–11 onwards
Example:
Suppose NEDFi earned ₹100 crore in total income in AY 2008–09. Under Section 10(23BBF), ₹60 crore would be exempt, and only ₹40 crore would be included in its taxable income for that year.
From AY 2010–11 and beyond, its entire income is exempt, provided it continues to operate within its mandate of regional development.
This provision reflects the government’s commitment to strengthening financial institutions that support underdeveloped regions.
