CBDT Notification No. 38/2026
Income Tax Exemption for
OPELIP under Section 10(46)
The Central Board of Direct Taxes grants income tax exemption to the Odisha PVTG Empowerment and Livelihoods Improvement Programme (OPELIP) — a full analysis of the notification, applicable assessment years, exempt income categories, and compliance conditions.
📋 Notification 38/2026 — At a Glance
2. What is Section 10(46) of the Income Tax Act?
Section 10(46) of the Income-tax Act, 1961 provides income tax exemption to specified income of bodies, authorities, boards, trusts, or commissions established or constituted by a Central, State or Provincial Act — or by the Central/State Government — for the purpose of regulating or administering any activity for the benefit of the general public.
This exemption is not automatic. The entity must be specifically notified by the Central Government through an Official Gazette notification issued by CBDT. The notification specifies both the entity and the exact categories of income that qualify for exemption — called "specified income."
Government-Backed Bodies Only
Only entities established under Central, State, or Provincial Acts, or by Govt. order, are eligible.
CBDT Notification Required
Exemption is granted only after CBDT specifically notifies the entity in the Official Gazette.
Specified Income Only
Only the categories of income mentioned in the notification are exempt — not all income of the entity.
No Commercial Activity
The entity must not engage in any commercial activity to retain the exemption status.
Time-Bound Exemption
Exemption is granted for a specific period (usually 5 AYs). Re-notification required after expiry.
ITR Filing Mandatory
Despite the exemption, the entity must file income tax returns under Section 139(4C)(g).
Section 10(46) exempts from total income:
"any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called), or a class thereof which —
- (a) has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public;
- (b) is not engaged in any commercial activity; and
- (c) is notified by the Central Government in the Official Gazette for the purposes of this clause."
Explanation: "Specified income" means income of the nature and to the extent specified in the CBDT notification — including but not limited to government grants, fees, fines, and capital receipts as notified.
| Parameter | Section 10(46) | Section 10(46A) |
|---|---|---|
| Introduced | Finance Act 2008 | Finance Act 2022 |
| Type of Body | Any notified authority / board / trust / commission | Statutory bodies / authorities (not companies) |
| Constitution Requirement | Under Central/State/Provincial Act or by Govt. order | Under Central or State Act specifically |
| Nature of Exemption | Specific income categories notified by CBDT | All income of the body (more comprehensive) |
| Commercial Activity Bar | ❌ Not allowed | ❌ Not allowed |
| CBDT Notification | Required | Required |
| Scope | Narrower — only notified income exempt | Broader — entire income exempt if conditions met |
| Examples | OPELIP, District Legal Services Authorities, State Boards | FSSAI, Varanasi Development Authority, MDDA |
CBDT regularly notifies various government-backed bodies under Section 10(46). Recent examples (2025–2026) include:
| Entity | Notification | Income Exempt | AYs Covered |
|---|---|---|---|
| OPELIP, Odisha | No. 38/2026 | Govt. grants, FD/savings interest (refundable), tender fees | 2025-26 to 2029-30 |
| CJM-cum-District Legal Services Authority, Fatehabad | Nos. 25-28/2026 | Govt. grants, court receipts, recruitment fees, FD interest | 2023-24 to 2027-28 |
| District Legal Services Authority, Karnal | Nos. 25-28/2026 | Govt. grants, court receipts, FD interest | 2023-24 to 2027-28 |
| Haryana State Pollution Control Board (HSPCB) | CBDT 2025 | Consent fees, grants, FD interest | FY 2024-25 onwards |
| AICTE (All India Council for Technical Education) | CBDT 2025 | Approval/accreditation fees, grants, interest | FY 2024-25 onwards |
Is your government body / authority eligible for Section 10(46) exemption?
Our tax experts can assess your eligibility, prepare the CBDT application, and guide you through the entire notification process.
3. About OPELIP — The Notified Entity
The Odisha PVTG Empowerment and Livelihoods Improvement Programme (OPELIP) is a flagship tribal welfare programme of the Government of Odisha, implemented through the ST & SC Development, Minorities and Backward Classes Welfare Department.
OPELIP targets Particularly Vulnerable Tribal Groups (PVTGs) — the most marginalised sub-category within Scheduled Tribes, as identified by the Dhebar Commission (1960–61). India has 75 officially recognised PVTG groups; Odisha is home to the highest number — 13 PVTG groups — spanning over 1,600 notified villages.
Target Beneficiaries
62,000+ households across 13 PVTG communities in 12 districts of Odisha.
Geographic Coverage
12 districts: Malkangiri, Rayagada, Angul, Deogarh, Ganjam, Nuapada, Keonjhar, Sundergarh, Gajapati, Kandhamal, Kalahandi & Mayurbhanj.
Core Focus Areas
Land rights, agriculture, nutrition security, financial inclusion, SHG formation, and natural resource management.
Awards & Recognition
Won the prestigious SKOCH Award (2023) for OPNIP nutrition initiative — Odisha PVTG Nutrition Improvement Programme.
International Support
Supported by IFAD (International Fund for Agricultural Development). Phase II has external funding of ₹734.86 crore.
PAN Number
AAALO0342F (as notified in CBDT Notification No. 38/2026)
4. Notification Summary & Cited Text
Below is a structured summary and the key provisions cited from the official CBDT Notification No. 38/2026 dated 27th March 2026:
Issuing Authority: Ministry of Finance, Department of Revenue, Central Board of Direct Taxes
Published in: Official Gazette of India, New Delhi, 27th March 2026 | S.O. 1627(E)
Para 1 — Grant of Exemption:
The Central Government, in exercise of powers under clause (46) of Section 10 of the Income-tax Act, 1961, notifies 'Odisha PVTG Empowerment and Livelihoods Improvement Programme (OPELIP)' (PAN: AAALO0342F), an Authority constituted by the State Government of Odisha, for the purposes of the said clause, in respect of the following specified income:
- (a) Grants received from the State Government of Odisha;
- (b) Interest on Fixed Deposit and Savings Account, which are refundable to Government of Odisha; and
- (c) Non-refundable Tender Fee.
Para 2 — Conditions: The notification is effective subject to OPELIP —
- (a) shall not engage in any commercial activity;
- (b) activities and the nature of the specified income shall remain unchanged throughout the financial years; and
- (c) shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of Section 139 of the Income-tax Act, 1961.
Para 3 — Consequences of Non-Compliance: Failure to comply may result in initiation of penal actions under the Income-tax Act, 1961 and withdrawal of the exemption granted under Section 10(46) of the Act.
Para 4 — Applicability Period: This notification shall be deemed to have been applied for AY 2025-26 (FY 2024-25) and shall apply for AY 2026-27, 2027-28, 2028-29, and 2029-30 (FY 2025-26 to FY 2028-29).
5. Official Notification — PDF Viewer
View the official CBDT Notification No. 38/2026 as published on the Income Tax India official website:
📋 CBDT Notification No. 38/2026 | S.O. 1627(E) | Dated 27th March 2026
📥 Open Full PDF6. Exempt Income Categories — Detailed Analysis
The notification specifies three categories of income that are exempt from income tax in the hands of OPELIP. Each category has specific characteristics and limitations:
Category (a): Grants Received from State Government
OPELIP receives programme grants from the Government of Odisha for implementing tribal welfare activities across 12 districts. These grants fund:
- Agricultural support and livelihood enhancement activities
- Community institution building (SHGs, Village Development Associations)
- Nutritional intervention programmes (OPNIP — Odisha PVTG Nutrition Improvement Programme)
- Land titling facilitation and natural resource management
- Capacity building and training of PVTG communities
- Infrastructure development in remote tribal villages
Without the Section 10(46) exemption, such grants received from the State Government — even though they are used entirely for public welfare — could technically be classified as income and taxed. This exemption ensures the grants remain fully deployable for tribal welfare.
Category (b): Interest on FD & Savings Account (Refundable to Govt.)
OPELIP maintains programme funds in Fixed Deposits and Savings Bank Accounts pending utilisation for tribal welfare activities. These accounts earn interest income. The critical qualifier in the notification is:
This distinction is significant — the exemption is deliberately narrow, covering only the interest on government money temporarily held by OPELIP, not any self-generated investment income. Banks deducting TDS on such FD interest should be informed of OPELIP's exempt status post-notification.
| Type of Interest | Tax Treatment |
|---|---|
| Interest on FDs refundable to Govt. of Odisha | ✅ Exempt under Notification 38/2026 |
| Interest on savings accounts refundable to Govt. of Odisha | ✅ Exempt under Notification 38/2026 |
| Interest on any other FDs / accounts NOT refundable to Govt. | ❌ Taxable — not covered by this notification |
Category (c): Non-Refundable Tender Fee
OPELIP collects tender fees when inviting bids for procurement of goods, services, or works required for programme implementation (e.g., construction of creches, procurement of agricultural inputs, NGO empanelment). These fees are non-refundable — i.e., they are not returned to tenderers regardless of whether their bid is successful.
Typically, such fees would constitute income in the hands of the collecting entity and be liable to income tax. This exemption ensures that OPELIP's administrative income from tender processes does not create tax liability, allowing more resources to flow toward programme activities.
⚠️ Income NOT Covered by This Exemption
| Type of Income | Tax Status | Reason |
|---|---|---|
| Grants from State Government | ✅ Exempt | Specifically notified in Para 1(a) |
| Interest on FD/savings refundable to Govt. | ✅ Exempt | Specifically notified in Para 1(b) |
| Non-refundable tender fees | ✅ Exempt | Specifically notified in Para 1(c) |
| Income from commercial activities (if any) | ❌ Taxable | Commercial activity prohibited under condition (a) |
| Interest on OPELIP's own non-refundable FDs | ❌ Taxable | Not within Para 1(b) qualifier |
| Grants from Central Government / IFAD | ❌ May be taxable | Not specifically mentioned in this notification |
| Sale of assets | ❌ Taxable | Capital gains not notified in this exemption |
| Consultancy or service income | ❌ Taxable | Commercial activity prohibited; not notified |
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7. Applicable Assessment Years
Retrospective Application
The notification is deemed to have applied from AY 2025-26. This means if OPELIP had already paid tax or had tax withheld (TDS) on these categories of income in FY 2024-25, a refund can be claimed in the ITR. The Explanatory Memorandum certifies no adverse effect from this retrospective application.
Current Assessment Year
Exemption fully applicable for income earned between 1st April 2025 and 31st March 2026. OPELIP should ensure TDS deducted by banks on FDs is claimed back in the ITR for AY 2026-27.
Future Year 1
Exemption continues subject to ongoing compliance with all three conditions — no commercial activity, unchanged nature of income, and ITR filing.
Future Year 2
Exemption continues. Periodic internal review recommended to ensure conditions are not inadvertently breached.
Final Year of Exemption
This is the last assessment year covered under Notification 38/2026. OPELIP must apply for re-notification before the expiry to ensure continuity of the exemption from AY 2030-31 onwards.
Re-Notification Required
This notification expires after AY 2029-30. OPELIP must file a fresh application with CBDT before the expiry of this period to seek re-notification under Section 10(46) for continued exemption.
| Assessment Year | Financial Year | Status | Action for OPELIP |
|---|---|---|---|
| AY 2025-26 | FY 2024-25 | ✅ Retrospectively Covered | File revised/belated ITR to claim refund of TDS deducted |
| AY 2026-27 | FY 2025-26 | ✅ Current Year | File ITR under Sec 139(4C)(g); claim TDS refund |
| AY 2027-28 | FY 2026-27 | ✅ Prospective | Continue compliance; file ITR annually |
| AY 2028-29 | FY 2027-28 | ✅ Prospective | Continue compliance; file ITR annually |
| AY 2029-30 | FY 2028-29 | ✅ Last Covered Year | Apply for re-notification before this year ends |
| AY 2030-31 onwards | FY 2029-30+ | ❌ Not Covered Yet | Fresh CBDT notification required; taxable if not re-notified |
8. Compliance Conditions — Critical Requirements
The exemption under Notification No. 38/2026 is conditional. Failure to comply with any of the following conditions may result in withdrawal of exemption and initiation of penalty proceedings under the Income-tax Act, 1961:
No Commercial Activity — Condition (a)
OPELIP must not engage in any commercial activity whatsoever. All activities must remain in the nature of tribal welfare, livelihood improvement, and public benefit. Any revenue-generating commercial venture — even if profits are used for welfare — risks violating this condition and losing the exemption.
Unchanged Nature of Income & Activities — Condition (b)
The nature of the specified income (grants, refundable FD/savings interest, tender fees) and the programme's activities must remain unchanged throughout all financial years covered by the notification. Any material change in income structure or programme objectives should be reported to CBDT and a fresh notification sought if required.
Mandatory ITR Filing — Condition (c)
OPELIP must file its Income Tax Return (ITR) under Section 139(4C)(g) of the Income-tax Act, 1961 for every assessment year covered by this notification — despite the income being exempt. Non-filing of ITR is itself a breach of the exemption condition and may trigger the exemption's withdrawal and penalties.
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9. Before vs. After Notification 38/2026
- State government grants to OPELIP potentially taxable as income
- Interest on FDs and savings accounts taxed as "Income from Other Sources"
- TDS deducted by banks on FD interest — reducing available welfare funds
- Tender fees collected may attract income tax
- No clear legal basis for claiming exemption
- Tax liability reduces funds available for PVTG tribal welfare activities
- Administrative burden of tax provisions without corresponding exemption framework
- State government grants = Fully exempt under Section 10(46)
- Interest on government-refundable FDs/savings = Fully exempt
- TDS deducted on FD interest = Refundable via ITR filing
- Non-refundable tender fees = Fully exempt from income tax
- Retrospective benefit from AY 2025-26 — past taxes can be reclaimed
- Full welfare funds retained for tribal empowerment activities
- Clear compliance framework — annual ITR filing under Sec 139(4C)(g)
10. Who Should Know About This Notification?
While this notification directly benefits OPELIP, its significance extends to a broader audience:
| Stakeholder | Relevance | Action Required |
|---|---|---|
| OPELIP Programme Management | Direct beneficiary of tax exemption | File ITR under Sec 139(4C)(g); inform banks of exempt status; reclaim past TDS |
| Government of Odisha (ST&SC Dept.) | Constituting authority; interest refunded to them | Ensure OPELIP's tax compliance to protect exemption |
| Banks holding OPELIP FDs | Required to stop/adjust TDS deduction on exempt FDs | Update TDS records for OPELIP; stop future TDS on notified FDs |
| OPELIP's Tax Advisor / CA | Must ensure compliance with all three conditions | File ITR annually; monitor income nature; advise on re-notification |
Beyond OPELIP, this notification is significant for:
- Other State Government Programmes — Similar welfare programmes in other states (tribal development, livelihood improvement, nutritional schemes) that receive government grants and earn incidental interest may similarly qualify for Section 10(46) exemption and should apply to CBDT.
- Tax Professionals advising government-backed bodies, societies, and trusts — this serves as a template for understanding Section 10(46) exemption structure and conditions.
- NGOs and Implementing Agencies working under government-sponsored tribal or welfare programmes — understanding what income is and is not covered under such exemptions prevents inadvertent tax defaults.
- Income Tax Practitioners handling ITR filings for similar entities — this notification provides clarity on mandatory ITR filing obligations even for exempt entities under Section 139(4C)(g).
Key points for Chartered Accountants and Tax Practitioners advising clients on Section 10(46):
- Eligibility Assessment: First confirm client is a body/authority constituted under a Central/State/Provincial Act or by government order — not a private entity, company, or LLP.
- Income Mapping: Clearly map all income sources of the entity and identify which qualify for Section 10(46) exemption based on notification.
- TDS Management: Immediately after notification is issued, inform banks and other TDS deductors of the entity's exempt status to stop future TDS. File Form 13 (lower deduction certificate) if needed.
- Mandatory ITR under 139(4C)(g): Despite exemption, ITR filing is mandatory. Non-filing is a breach of exemption conditions — not a mere procedural lapse.
- Retrospective Years: Claim TDS refunds for AY 2025-26 by filing belated/revised returns before 31st December 2026 (for AY 2026-27 filing) or via updated return.
- Re-notification Calendar: Set a reminder to apply for re-notification at least 12 months before the last notified AY expires (i.e., before AY 2029-30 ends).
- Document Conditions Compliance: Maintain annual internal audit / certification that the entity has not engaged in commercial activity — serves as evidence if CBDT scrutinises the exemption.
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11. How to Apply for Section 10(46) Exemption
If your government body, authority, or commission is not yet notified under Section 10(46), here is the process to apply for CBDT notification:
Confirm Eligibility
Verify that your entity is established by or under a Central, State or Provincial Act or by Government order; not engaged in commercial activity; and exists for the benefit of the general public.
Prepare Application to CBDT
File a formal application to CBDT through the concerned Ministry or State Government. Include: constituting act, PAN, nature of income sought to be exempted, financial statements, and objectives of the entity.
Submit to Pr. CIT / CIT
Submit the application to the Principal Commissioner or Commissioner of Income-tax (or Principal Director / Director of IT) under whose jurisdiction your cases fall. CBDT has standardised this application process.
CBDT Review
CBDT examines whether the entity genuinely qualifies under the criteria — checks constituting statute, non-commercial nature, public benefit purpose, and the specific categories of income.
Gazette Notification Issued
If satisfied, CBDT issues the notification in the Official Gazette specifying the entity, the exempt income categories, the period of exemption, and the compliance conditions.
Post-Notification Compliance
After notification: file ITR annually under Section 139(4C)(g), inform banks to stop TDS, claim TDS refunds for past years, and apply for re-notification before expiry of the current notification period.
12. Section 10(46) Compliance Checklist for OPELIP
✅ Section 10(46) Annual Compliance Checklist
For OPELIP and similar government-notified bodies under Notification 38/2026 (AY 2026-27 onwards)
- Confirm CBDT Notification 38/2026 is in force
- Verify no commercial activity undertaken
- Review nature of income — unchanged from notification
- Separate books for exempt vs. other income
- Collect FD/savings interest statements
- Verify FD/savings are refundable to Govt. of Odisha
- Tally tender fees collected (non-refundable)
- Inform banks of exempt status — stop TDS
- Collect Form 16A from banks (if TDS deducted)
- Check Form 26AS / AIS for TDS credits
- Prepare financial statements for the year
- File ITR under Section 139(4C)(g)
- Claim TDS refund if deducted on exempt income
- e-Verify ITR within 30 days of filing
- Maintain compliance certificate annually
- Plan re-notification application before AY 2029-30
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13. Frequently Asked Questions (FAQs)
CBDT Notification No. 38/2026 (S.O. 1627(E)), dated 27th March 2026, is an official notification issued by the Ministry of Finance under clause (46) of Section 10 of the Income-tax Act, 1961. It grants income tax exemption to the Odisha PVTG Empowerment and Livelihoods Improvement Programme (OPELIP) — an authority constituted by the State Government of Odisha — in respect of three categories of specified income: state government grants, interest on certain FDs/savings, and non-refundable tender fees.
OPELIP is a tribal welfare programme that receives government grants and holds funds temporarily in bank accounts (earning interest) before deploying them for PVTG empowerment activities. Without the exemption, this incidental income — particularly the interest earned on government funds — would attract income tax, reducing the money available for tribal welfare. The Section 10(46) exemption ensures these government-channelled funds remain fully available for their intended purpose of improving livelihoods among India's most vulnerable tribal communities.
The notification covers 5 Assessment Years:
- AY 2025-26 (FY 2024-25) — Retrospective
- AY 2026-27 (FY 2025-26) — Current
- AY 2027-28 (FY 2026-27)
- AY 2028-29 (FY 2027-28)
- AY 2029-30 (FY 2028-29) — Last covered year
No. Only the three specifically notified categories are exempt: (a) grants from State Government of Odisha, (b) interest on FDs/savings refundable to Government of Odisha, and (c) non-refundable tender fees. Any other income — such as interest on OPELIP's own non-refundable funds, grants from Central Government or IFAD (if any), or income from any commercial activity — is not covered by this notification and may be taxable.
Yes. Filing ITR is a mandatory compliance condition under Para 2(c) of the notification. OPELIP must file its ITR annually under Section 139(4C)(g) of the Income-tax Act, 1961 for every assessment year covered by the notification. Failure to file ITR is a breach of the exemption conditions and can lead to withdrawal of the exemption and penal action.
Section 10(46) exempts only the specific categories of income mentioned in the CBDT notification — it is narrower. Section 10(46A), introduced by Finance Act 2022, provides a broader exemption covering all income (or substantial income) of eligible statutory bodies and authorities constituted under Central or State Acts for specified purposes. Section 10(46A) is more comprehensive but has stricter eligibility criteria requiring the body to be established under a specific statute for specified purposes. Section 10(46) has been available longer and covers a wider range of government-backed entities.
Yes. Since the notification applies retrospectively to AY 2025-26 (FY 2024-25), any TDS deducted by banks on OPELIP's FD interest during FY 2024-25 can be claimed as a refund. OPELIP should file its ITR for AY 2025-26 (if not already filed) or file a revised return — claiming the TDS credit against NIL tax liability on the now-exempt income. The refund will be processed by the Income Tax Department upon verification of the ITR.
Any engagement in commercial activity — regardless of how minor — is a breach of Condition (a) of Para 2. This can trigger: (1) withdrawal of the Section 10(46) exemption, (2) retrospective taxation of all previously exempt income along with interest, and (3) penal actions under the Income-tax Act, 1961. OPELIP's management must ensure all activities remain strictly within the scope of tribal welfare and livelihood improvement — no commercial transactions, sale of goods for profit, or fee-based services outside the notified framework.
Similar programmes can apply for CBDT notification under Section 10(46) by: (1) confirming they are constituted under a State/Central Act or Government order; (2) establishing they do not engage in commercial activities; (3) filing an application with the concerned CBDT/Pr. CIT office through the relevant Ministry or State Government; (4) providing audited financial statements, constituting statute, PAN, and details of income categories sought to be exempted. CBDT reviews the application and issues the Gazette notification if satisfied. Consulting a tax professional specialising in government body taxation is strongly recommended.
Separately from OPELIP's exemption, when such interest is returned to the Government of Odisha (a State Government), the State Government itself is generally not subject to income tax on its own receipts under Section 10(20) of the Income-tax Act (which exempts income of local authorities) — though State Governments are separate from local authorities. In practice, income of State Governments from their own funds is generally outside the tax net. This notification addresses the tax position at the level of OPELIP — the intermediate implementing entity — where income tax liability would otherwise arise.
14. Official Sources & Reference Links
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