CBDT Notification on Core Settlement Guarantee Fund Exemption under Section 10(23EE)

Background and Context

The Central Board of Direct Taxes has issued Notification No. 78/2026-Income Tax dated 7th July 2026 granting income-tax exemption under Section 10(23EE) of the Income-tax Act, 1961 to the Core Settlement Guarantee Fund (PAN: AAAJN1263G) established by National Commodity Clearing Limited (NCCL), which is a recognised clearing corporation.

This notification applies for the period covering Assessment Years 2019-2020 to 2026-2027 and clarifies how the exemption continues to operate despite the repeal of the Income-tax Act, 1961 by the Income-tax Act, 2025. The continuity of the exemption is anchored in specific transitional provisions contained in Section 536(2) of the Income-tax Act, 2025.

Repeal of the Income-tax Act, 1961

The Income-tax Act, 1961 (43 of 1961) has been formally repealed by Section 536(1) of the Income-tax Act, 2025 (30 of 2025). However, the 2025 Act includes extensive savings and transitional provisions to ensure that rights and obligations relating to earlier tax years are preserved.

Saving Provisions under Section 536(2) of the Income-tax Act, 2025

The notification expressly relies on Section 536(2)(a) to (c) and (e) of the Income-tax Act, 2025, which provide that:

  • Despite the repeal of the Income-tax Act, 1961 and subject to Section 536(4):
    • The previous operation of the provisions of the 1961 Act, as well as any orders, actions or consequences under that Act, remain unaffected.
    • Any right, privilege, obligation or liability that has already accrued, arisen or been incurred under the 1961 Act continues to be valid and enforceable.
  • As per Section 536(2)(c):
    • The provisions of the 1961 Act continue to govern:
      • Any proceedings pending as on the commencement date of the Income-tax Act, 2025, and
      • Any proceedings initiated on or after 1st April 2026 (including notice, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals) where such proceedings relate to a tax year beginning before 1st April 2026.
    • Such proceedings must be conducted using the procedural framework of the 1961 Act.
  • Under Section 536(2)(e):
    • Any ongoing matter as on the commencement date of the 2025 Act before any income-tax authority, other authority under the repealed Act, the Appellate Tribunal, or any court—whether by way of application, appeal, reference, revision or otherwise—shall continue and be concluded as if the 2025 Act had not come into force.

Important: These saving clauses ensure that exemptions, rights and procedural safeguards embedded in the Income-tax Act, 1961 remain fully applicable for tax years that began prior to 1st April 2026, even though the 1961 Act stands repealed in general.

Nature of Exemption under Section 10(23EE)

Scope of Section 10(23EE)

Section 10(23EE) of the Income-tax Act, 1961 provides a specific exemption for “any specified income of such Core Settlement Guarantee Fund, set up by a recognised clearing corporation in accordance with the regulations as may be notified by the Central Government in the Official Gazette for the purposes of that clause”.

In essence: