CBDT Notifies Tax Exemption for West Bengal Construction Workers Welfare Board Under Section 10(46)

The Central Board of Direct Taxes has recently issued a significant notification providing income-tax relief to a state welfare institution. Through Notification No. 7/2026–Income Tax dated 14 January 2026, the Board has extended tax exemption benefits under Section 10(46) of the Income-tax Act, 1961 to the West Bengal Building and Other Construction Workers Welfare Board for certain designated income streams.

The notification has been issued pursuant to the powers vested in the Central Government under clause (46) of Section 10 of the Income-tax Act, 1961 (43 of 1961). This provision empowers the government to grant exemptions to specified institutions and bodies engaged in welfare activities, subject to fulfillment of prescribed conditions.

The West Bengal Building and Other Construction Workers Welfare Board (PAN AAALW0061D) is a statutory body established by the Government of West Bengal for the welfare and benefit of construction workers operating within the state. The Board operates under the framework of welfare legislation designed to protect and support workers engaged in building and construction activities.

Categories of Income Covered Under the Exemption

The notification specifically identifies four distinct categories of income that shall qualify for exemption from income-tax in the hands of the Board:

1. Cess Collections Under Welfare Legislation

The Board is authorized to collect cess under the Building and Other Construction Workers Welfare Cess Act, 1996 (28 of 1996) and the subordinate rules framed thereunder. All amounts received by way of such cess collections shall be exempt from taxation. This cess represents a statutory levy imposed on construction activities to fund welfare measures for workers in the sector.

2. Registration and Subscription Charges

The Board collects registration fees from construction workers who enroll themselves as beneficiaries under the welfare scheme. Additionally, yearly subscription amounts are collected from registered workers to maintain their beneficiary status. Both these revenue streams have been brought within the ambit of the tax exemption, recognizing their welfare-oriented nature.

3. Government Grants and Loans

Financial assistance received by the Board from governmental authorities in the form of grants-in-aid and loans shall be exempt from income-tax. Such governmental support typically forms a crucial component of funding for welfare boards and enables them to discharge their statutory functions effectively.

4. Income from Investments

Interest income generated from investments made by the Board shall also qualify for exemption. Welfare boards typically invest their surplus funds in secure instruments to generate additional resources for welfare activities, and the exemption on such investment income ensures that the entire return is available for welfare purposes.

Stringent Conditions Attached to the Exemption

The notification makes it abundantly clear that the exemption granted under Section 10(46) is not unconditional. The West Bengal Building and Other Construction Workers Welfare Board must satisfy three mandatory conditions to continue enjoying the tax exemption: