CIRCULAR No. 18/2017
F.No.385/01/2015-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central board of Direct Taxes
North Block, New Delhi
29th May 2017
Subject: Requirement of tax deduction at source in case of entities whose income is exempted under Section 10 of the Income-Tax Act, 1961- Exemption thereof.
The Central Board of Direct Taxes (the Board) had earlier issued Circular No. 4/2002 dated 16.07.2002 and Circular No. 7/2015 dated 23 .04.2015 which laid down that in case of such entities, whose income is unconditionally exempt under Section 10 of the Income-tax Act (the Act) and who are also statutorily not required to file return of income as per Section 139 of the Act, there would be no requirement for tax deduction at source (TDS) from the payments made to them since their income is anyway exempted from tax under the Act. The issue of whether exemption from TDS can be extended to more entities on these principles and whether the exemption is needed to be withdrawn in respect of some of the exempted entities was examined by the Board.
