Purpose:
This section provides tax exemption to professional associations (like medical councils, bar councils, etc.) that promote art, science, or education, provided they meet certain conditions.
Key Conditions for Exemption:
✅ Must be an association/institution (not a business).
✅ Must be approved by the Central Government (e.g., Indian Medical Association, Bar Council of India).
✅ Income must be used solely for promoting its objectives (not for private profit).
✅ Exemption covers:
- Membership fees
- Grants/donations
- Income from investments (if used for core activities).
Example 1: Bar Council’s Exam Fee Income
- Association:Bar Council of India (approved).
- Income Sources:
- Lawyer enrollment exam fees: ₹10 Crores
- Interest on fixed deposits (used for legal education): ₹50 Lakhs
- Total Income:₹10.5 Crores
- Taxable Income:₹0 (Fully exempt under Section 10(23A))
Example 2: Medical Association’s Commercial Income (Taxable)
- Association:Indian Medical Association (approved).
- Income Sources:
- Membership fees: ₹5 Crores (Exempt)
- Profit from medical journal sales: ₹1 Crore (Commercial activity)
- Exempt Income (Core activities):₹5 Crores
- Taxable Income (Business income):₹1 Crore
Example 3: Unapproved Engineering Association (Taxable)
- Association:Private Engineering Society (not govt-approved).
- Income:₹2 Crores (from seminars and workshops).
- Taxable Income:₹2 Crores (No exemption without approval).
