The Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance, has issued two notifications providing income-tax exemption to the Delhi Pollution Control Committee (DPCC), PAN: AADAD2584N, in respect of specified categories of income. The notifications ensure continuity of the tax exemption for earlier financial years under the Income-tax Act, 1961 and extend the exemption prospectively under the Income-tax Act, 2025.
The Delhi Pollution Control Committee is a statutory body constituted by the Central Government under Section 4 of the Water (Prevention and Control of Pollution) Act, 1974 and Section 6 of the Air (Prevention and Control of Pollution) Act, 1981.
Exemption for Assessment Years 2024-25 to 2026-27
Under Notification No. 86/2026, dated 16 July 2026 [S.O. 3919(E)], the Central Government has notified DPCC for the purposes of Section 10(46) of the Income-tax Act, 1961. The notification has been issued in accordance with the savings and transitional provisions contained in Section 536 of the Income-tax Act, 2025.
The exemption under Notification No. 86/2026 covers the following specified income of DPCC:
- Government grants and subsidies;
- Consent fees, licence fees and application fees collected under statutory mandate;
- Penalties and fines levied under environmental laws; and
- Interest earned on bank deposits or investments of surplus funds.
The notification shall be deemed to have applied for Assessment Years 2024-25, 2025-26 and 2026-27, corresponding to Financial Years 2023-24, 2024-25 and 2025-26, respectively.
The exemption is subject to the conditions that DPCC shall not engage in any commercial activity; its activities and the nature of the specified income shall remain unchanged during the relevant financial years; and it shall file its return of income in accordance with Section 139(4C)(g) of the Income-tax Act, 1961.
Failure to comply with the prescribed conditions may result in withdrawal of the exemption granted under Section 10(46) and initiation of penal action under the Income-tax Act, 1961. The notification also clarifies that no person is being adversely affected by its retrospective application.
Prospective Exemption for Tax Years 2026-27 and 2027-28
Under Notification No. 87/2026, dated 16 July 2026 [S.O. 3920(E)], the Central Government has notified DPCC under Schedule III, Table Serial Number 36, read with Section 11 of the Income-tax Act, 2025.
The notification provides exemption for the same categories of specified income, namely government grants and subsidies; statutory consent, licence and application fees; penalties and fines levied under environmental laws; and interest earned from bank deposits or investments of surplus funds.
Notification No. 87/2026 shall apply for Tax Years 2026-27 and 2027-28.
The exemption is subject to the conditions that DPCC shall not undertake any commercial activity; shall file its return of income in accordance with Section 263(9)(c)(xiii) of the Income-tax Act, 2025; and shall ensure that its activities and the nature of its specified income remain unchanged throughout the relevant financial years.
Non-compliance with these conditions will result in withdrawal of the exemption available under Schedule III, read with Section 11 of the Income-tax Act, 2025, and may lead to initiation of proceedings under the Act.
Seamless Transition to the Income-tax Act, 2025
The two notifications together provide a seamless transition of the exemption available to DPCC from the Income-tax Act, 1961 to the Income-tax Act, 2025. While Notification No. 86/2026 addresses the exemption relating to financial years governed by the earlier law, Notification No. 87/2026 provides the corresponding exemption for the tax years governed by the new Act.
The notifications recognise the statutory and non-commercial nature of DPCC’s functions and provide tax certainty in respect of income arising from its regulatory and environmental protection activities.
The Notifications can be accessed at: Notification No. 86/2026 , Notification No. 87/2026
