Comprehensive Analysis of CBDT Notification 116/2026: Tax Exemption for Maharashtra Electricity Regulatory Commission Under the Transitional Tax Regime

The landscape of direct taxation in India is undergoing a monumental transition with the phasing out of the legacy legislation and the introduction of the new tax code. Amidst this significant shift, the Central Board of Direct Taxes (CBDT) has promulgated Notification No. 116/2026, officially dated 25 August 2026, published under the reference S.O. 4706(E). This critical directive grants specific tax exemptions to the Maharashtra Electricity Regulatory Commission (holding PAN: AAAGM0004R).

This article provides an in-depth legal examination of this notification, focusing on the interplay between the repealed Income Tax Act 1961, the newly enacted Income-tax Act, 2025, and the specific saving clauses that protect the rights of the assessee.

Understanding the Core Exemption Framework

To fully grasp the implications of this recent CBDT notification, it is essential to dissect the statutory provisions that empower the Central Government to grant such financial immunities to statutory bodies.

The Role of Section 10(46A)

Historically, the Income Tax Act 1961 provided various avenues for tax exemptions to ensure that government bodies, trusts, and commissions could operate without the financial burden of direct taxes, thereby allowing them to channel their resources entirely toward public welfare and regulatory duties.

Section 10(46A) of the Income Tax Act 1961 was specifically designed to exempt the specified income of certain bodies, authorities, boards, trusts, or commissions. For an entity to qualify under this provision, it must meet the following criteria:

  • It must not be structured as a company.
  • It must be constituted by or under a Central, State, or Provincial Act, or constituted by the Central Government or a State Government.
  • It must be explicitly notified by the Central Government in the Official Gazette for the purposes of this specific section.

By invoking this section, the government ensures that regulatory bodies do not suffer tax leakages on the income they generate through statutory fees, grants, or other authorized operational revenues.

The Assessee: Maharashtra Electricity Regulatory Commission

The assessee in this context is the Maharashtra Electricity Regulatory Commission, a statutory body established under the Electricity Regulatory Commissions Act, 1998 (Act No. 14 of 1998). The primary mandate of such commissions is to regulate electricity tariffs, formulate policies regarding power generation and distribution, and ensure a level playing field within the energy sector.