income tax

Tax Exemption for National Skill Development Corporation: Details & Conditions

Tax Exemption Notification for the National Skill Development Corporation

On January 21, 2022, the Central Board of Direct Taxes (CBDT) issued Notification No. 10/2022 regarding tax exemptions for the National Skill Development Corporation (NSDC). This organization was established by the Central Government to facilitate skill development in the country. Under Section 10(46) of the Income Tax Act, 1961, specified income received by NSDC is now exempt from taxation.

Details of the Notification

The notification outlines the following specified income types that NSDC is exempt from taxation:

  1. Government Grants: All amounts received as government grants.
  2. Skill Development Grants: Grants specifically earmarked for skill development.
  3. Capital Gains: Long-term or short-term capital gains from investments in skill development initiatives.
  4. Dividends and Royalties: Income from dividends and royalties related to skill development ventures backed by NSDC.
  5. Fees from Activities:
    • Accreditation fees
    • Registration fees
    • Fees from training partners
    • Other cost recovery for skill development activities
  6. Administrative Fees: Income from administrative and mobilization fees linked to scheme management.
  7. International Income: Income sourced from international institutions for skilling, training, and employability.
  8. Interest on Loans: Interest earned on loans provided to institutions engaged in skill development.
  9. Miscellaneous Income: Income from various sources, including:
    • Sale of scrap
    • Profit from asset sales
    • Application fees under the Right to Information (RTI)
    • Bank guarantee forfeitures
    • Interest on income tax refunds
    • Reversal of excess provisions
  10. Interest on Specified Income: Interest earned on the aforementioned incomes.

Conditions for Exemption

The tax exemption under this notification is conditional upon the following:

  • No Commercial Activities: NSDC must refrain from engaging in any commercial ventures.
  • Consistency in Activities: The nature of NSDC’s activities and specified income must remain unchanged throughout the relevant financial years.
  • Filing Requirements: NSDC is required to file income tax returns in accordance with Clause (g) of Sub-section (4C) of Section 139 of the Income Tax Act, 1961.