Section 10(23BBC) of the Income Tax Act provides a tax exemption for the income of the SAARC Fund for Regional Projects. This fund was established under the Colombo Declaration issued on 21st December 1991 by the Heads of State or Government of the SAARC member countries.
Key Features:
- The exemption applies only to the SAARC Fund for Regional Projects.
- The fund must be set up in accordance with the SAARC Charter, signed on 8th December 1985.
- The income must be used for regional development projects among SAARC nations.
Example:
Suppose the SAARC Fund invests ₹50 crore in a regional infrastructure project connecting India, Nepal, and Bangladesh. It earns ₹3 crore in interest income from these investments in India. Since the fund qualifies under Section 10(23BBC), the entire ₹3 crore is exempt from Indian income tax, provided the income is used for the intended regional development purposes.
This exemption reflects India’s commitment to regional cooperation and economic integration within South Asia.
