Income of a member of Scheduled Tribe residing in certain Specified Areas [Section 10(26)]

Exempted Incomes-Section 10(26)

Section 10(26) of the Income Tax Act provides special provisions for the income of a member of a Scheduled Tribe residing in certain Specified Areas. This provision aims to ensure that the members of Scheduled Tribes living in specified areas receive certain benefits and exemptions regarding their income.

Section 10(26) of the Income Tax Act, 1961, exempts the entire income of a person who belongs to a Scheduled Tribe and is a resident of a Sixth Schedule Area from tax, if the income is earned from any source located in the Sixth Schedule Area. This exemption applies to all types of income, including salary, business income, agricultural income, and any other income sources.

Scheduled Tribes are indigenous communities that are recognized by the Government of India. They are listed in the Schedule Tribes Order, 1950.

Conditions for Exemptions:

To be eligible for the exemption, the following conditions must be fulfilled:

  • The taxpayer must be a member of a Scheduled Tribe.
  • The taxpayer must be residing in any of the specified areas.
  • The income must be earned from any source located in any of the specified areas.
  • The exemption is available for all types of income, including income from salary, business, house property, and capital gains.
  • They must be a resident of a Sixth Schedule Area.
  • Their income must be earned from any source located in the Sixth Schedule Area.
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Specified Areas (Sixth Schedule Areas) under Section 10(26):

The Specified Areas under Section 10(26) of the Income Tax Act, 1961, refer to the Sixth Schedule Areas in India. These areas are designated as tribal areas under Article 244(2) of the Constitution of India and are governed by special provisions, including the Sixth Schedule, which gives them a certain degree of autonomy.

The Sixth Schedule Areas are located in the following states:

  • Assam
  • Arunachal Pradesh
  • Meghalaya
  • Mizoram
  • Nagaland
  • Tripura

Some of the well-known Sixth Schedule Areas in India include:

  • Karbi Anglong Autonomous District and Dima Hasao Autonomous District in Assam
  • Kameng District, Lower Subansiri District, Papum Pare District, East Siang District, West Siang District, Upper Siang District, Siang Belt District, Lower Dibang Valley District, Upper Dibang Valley District, Tirap District, Longding District, and Tawang District in Arunachal Pradesh
  • Garo Hills Autonomous District and Jaintia Hills Autonomous District in Meghalaya
  • Chakma Autonomous District Council area in Mizoram
  • Tuensang District, Mon District, Wokha District, Kohima District, Phek District, Zunheboto District, Dimapur District, Longleng District, and Kiphire District in Nagaland
  • Tripura Tribal Areas Autonomous District Council area in Tripura

The following are the Sixth Schedule Areas of India:

  • Assam: Bodoland Territorial Council, Karbi Anglong Autonomous Council, and Dimasa Hasao Autonomous Council
  • Arunachal Pradesh: Arunachal Pradesh Administrative Units
  • Meghalaya: Garo Hills Autonomous District Council, Khasi Hills Autonomous District Council, and Jaintia Hills Autonomous District Council
  • Mizoram: Chakma Autonomous District Council and Lai Autonomous District Council
  • Tripura: Tripura Tribal Areas Autonomous District Council
  • Jharkhand: Santhal Parganas Autonomous District Council
  • Chhattisgarh: Bastar Tribal Development Council
  • Odisha: Koraput-Balangir-Kalahandi Region
  • Madhya Pradesh: Jhabua Tribal Development Council, Alirajpur Tribal Development Council, and Mandla Tribal Development Council
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Benefits of the exemption

The exemption under Section 10(26) provides several benefits to the members of Scheduled Tribes residing in specified areas:

Financial support:

By exempting their income from taxation, the government provides financial support to the members of Scheduled Tribes, allowing them to utilize their income for their own development and well-being.

Promotion of economic development:

The exemption encourages economic activities within the specified areas, leading to the overall development of the region and the upliftment of the Scheduled Tribe communities.

Preservation of cultural identity:

By providing special provisions for members of Scheduled Tribes, the government recognizes and preserves their unique cultural identity, ensuring that they can continue to live in harmony with their traditions and customs.

Exceptions to Exemptions:

However, the exemption is not available for income from the following sources:

  • Interest income on securities.
  • Dividend income.
  • Rental income from immovable property located outside the specified areas.
  • Income from any business activity carried on outside the specified areas.

Conclusion

The exemption under Section 10(26) of the Income Tax Act plays a crucial role in providing economic support and upliftment to the members of Scheduled Tribes residing in specified areas. By exempting their income from taxation, the government aims to promote economic development, preserve cultural identity, and ensure that the benefits of development reach the marginalized communities. It is essential for individuals who meet the conditions specified under Section 10(26) to take advantage of this exemption and utilize their income for their own welfare and development.

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