Section 10(23BB) of the Income Tax Act provides a tax exemption for the income of a Khadi and Village Industries Board established in a State by or under a State or Provincial Act. The purpose of this exemption is to support the development of khadi and village industries at the state level.
Key Conditions:
- The authority must be established by law (not just registered as a society or trust).
- Its objective must be the development of khadi or village industries.
- The terms “khadi” and “village industries” are defined as per the Khadi and Village Industries Commission Act, 1956.
Example:
Suppose the Odisha Khadi and Village Industries Board is constituted under a State Act to promote hand-spun khadi and rural crafts. It earns ₹1 crore in a year from training programs, product sales, and government grants.
Since it is:
- A statutory body,
- Established for khadi development, and
- Operating within the scope of its mandate,
its entire income is exempt from income tax under Section 10(23BB).
This provision ensures that such Boards can reinvest their earnings into rural employment and traditional industries without tax erosion.
