Income Tax Exemption under Section 10(46) for Visakhapatnam Special Economic Zone Authority

The Central Board of Direct Taxes has issued Notification No. 32/2026 dated 25th March, 2026, granting a significant income tax exemption to the Visakhapatnam Special Economic Zone Authority under Section 10(46) of the Income-tax Act, 1961. This relief covers multiple specified revenue streams of the authority and is subject to strict compliance conditions.

This article explains the scope of the exemption, the categories of income covered, the conditions attached, the compliance requirements, and the period for which the exemption operates, along with its practical implications for the authority and similar statutory bodies.

Section 10(46) provides for income tax exemption to certain authorities, bodies or boards that:

  • Are constituted by or under a Central, State or Provincial Act, or
  • Are authorities, bodies or institutions established by the Government with specific statutory functions.

The Central Government, by notification in the Official Gazette, specifies:

  • The name of the authority/body; and
  • The nature of income to be exempt.

Important: Only the income categories expressly listed in the notification are exempt. Any income outside the specified list remains taxable as per normal provisions of the Income-tax Act, 1961.

Under Notification No. 32/2026, the Central Government has notified ‘Visakhapatnam Special Economic Zone Authority’ (PAN: AAALV1367K) for the purposes of Section 10(46).

Beneficiary: Visakhapatnam Special Economic Zone Authority

The notified entity is the Visakhapatnam Special Economic Zone Authority, an authority constituted by the Central Government to manage and administer the Visakhapatnam Special Economic Zone.

Being a statutory authority performing regulatory, administrative and developmental functions within the SEZ framework, it falls squarely within the type of entities contemplated under Section 10(46).

The notification clarifies that the exemption is restricted to specified income streams arising to the authority and does not provide a blanket exemption for all receipts.

Categories of Income Covered by the Exemption

The notification enumerates in detail the types of income that qualify for exemption under Section 10(46) in the hands of the Visakhapatnam Special Economic Zone Authority.

The specified income includes the following:

  1. Lease rent

    • Lease rent charged from units or allottees, as per Government prescribed rates, is exempt.
    • This typically relates to land, plots, standard design factories and other immovable properties within the SEZ, leased out for approved purposes.

  2. Receipts from I-Card and Permit fee

    • Income earned from issuing identity cards and permits to personnel, visitors, or contractors accessing the SEZ premises is covered.

  3. Allotment fee in respect of standard design factories

    • Fees charged at the time of allotting standard design factory premises to units or entities within the SEZ are part of the exempt income basket.

  4. Auction/Bid amount in case plots/building which fall vacant

    • Amounts realized through auction or bidding processes for plots or buildings that become vacant and are re-allotted or re-leased are eligible for exemption.

  5. Transfer charges in respect of Plot/building

    • Charges collected on transfer of plots or buildings from one allottee/unit to another are included in the notification.

  6. Fees for issue of Form-I for exemption of building plans

    • Fees received for issuing Form-I for exemption or clearance of building plans fall within the ambit of tax-exempt income.

  7. Processing fee for approval of building plans, conveying NOC’s etc.

    • Processing charges received for:
    • Approving building plans
    • Granting or conveying NOC’s (No Objection Certificates)
    • Other similar regulatory approvals
      are specifically listed as exempt.