Section 10(26) of Income Tax Act: Income Tax Benefits for ST Community

India’s tax laws are designed not only to collect revenue but also to support weaker sections of society. One such important provision is Section 10(26) of the Income Tax Act. It gives tax benefits to people belonging to the Scheduled Tribes (ST) community, but with certain conditions.

What is Section 10(26) of the Income Tax Act?

Section 10(26) is a special rule under the Income Tax Act that exempts certain income earned by members of Scheduled Tribes (ST) from tax.

Brief explanation of the provision

The law says that if you are an ST member living in specific areas of India, your income earned within that area is exempt from income tax. This includes both salary and income from business/profession.

So, if you are an ST individual working in these areas, you may not need to pay tax on your earnings.

Who introduced it and why

This provision was introduced by the Government of India to:

• Support the economic development of Scheduled Tribes
• Reduce financial pressure on ST communities living in remote or tribal regions
• Provide equal opportunities by ensuring they can save more and invest in their growth

Who is Eligible for Tax Benefits Under Section 10(26)?

Not every ST person in India can claim this benefit. There are specific conditions.

Criteria for Scheduled Tribe (ST) members

• You must be a member of a Scheduled Tribe as recognized under the Constitution of India.
• You should have a valid ST certificate issued by a competent authority.
• You must be an individual, not a company, partnership, or HUF (Hindu Undivided Family).

Geographical restrictions (specific states/regions)

This exemption is not available to all ST members across India. It is limited to:

• Arunachal Pradesh
• Manipur
• Mizoram
• Nagaland
• Tripura
• Meghalaya
• Sikkim
• Ladakh

In short, you must be both a resident and earning income from one of these specified areas.

What Types of Income are Exempt Under Section 10(26)?

This section covers specific types of income.

• Salary income: If you are working in the government or private sector in the specified states/regions, your salary income is exempt.
• Business or profession income: If you are running a small shop, business, or professional service (like a doctor, lawyer, or consultant) in the area, your business or professional income is exempt.
• Other categories of exempt income: 

• Income earned by living and working in the specified states
• Income received from any source within those areas

How to Claim Income Tax Benefits Under Section 10(26)?

Even though your income is exempt, you must still follow proper steps.

Required documents

• Scheduled Tribe Certificate (issued by State/Tribal authority)
• Proof of residence in the specified state/region
• Income proofs (salary slips, business records, bank statements)

Steps to claim during ITR filing

1. Check eligibility: Confirm that you are an ST member in the notified area.
2. Collect documents: Keep your ST certificate and income proofs ready.
3. File ITR: While filing your Income Tax Return (ITR), mention your exempt income under Section 10(26).
4. Submit documents if asked: Sometimes, the Income Tax Department may ask for your ST certificate and proof of residence.

Things to keep in mind

• This exemption is only for individuals, not companies or firms.
• Exemption applies only to income earned within the specified area.
• If you earn income outside the area (like rent in Delhi), it will be taxable.

Key Limitations and Conditions of Section 10(26)

While the section gives big benefits, there are certain limits and conditions.

Income sources covered vs. not covered

• Covered:
  • Salary earned in specified areas
  • Business/professional income in specified areas
• Not covered:
  • Income earned outside specified states
  • Income from investments, interest, or property outside these areas

Exclusions and restrictions

• Companies or firms owned by ST members cannot claim this exemption.
• Non-resident ST members (living outside specified states) are not eligible.
• If you move outside the state for work, your salary there will be taxable.

Why Section 10(26) is Important for the ST Community

This provision has a big impact on economic empowerment of tribal communities.

Benefits for economic empowerment

• Helps tribal people save more by reducing tax burden
• Encourages entrepreneurship among ST members
• Improves access to better education and healthcare by keeping more money in hand

Real-life examples

1. A teacher in Mizoram who is from the ST community does not pay tax on salary earned in Mizoram.
2. A shop owner in Arunachal Pradesh who belongs to ST does not pay tax on business income earned there.
3. But if the same teacher or shop owner shifts to Delhi, their income there becomes taxable.

Key points to remember

• Only individual ST members with a valid certificate are eligible.
• Exemption is limited to certain states like Nagaland, Mizoram, Meghalaya, Arunachal Pradesh, and others.
• Income earned outside these states is not exempt.
• Keep documents ready and claim exemption correctly while filing ITR.