Finance Ministry Confirms UIDAI Exempt from Income Tax

In a notable development, the Ministry of Finance has extended a five-year income tax exemption to the Unique Identification Authority of India (UIDAI), valid until the fiscal year 2027-28. This exemption applies to various income streams, including government grants, service fees, and interest earned from bank deposits.

Exemption Details

As outlined in a notification from the Central Board of Direct Taxes (CBDT), UIDAI will be exempt from paying income tax on multiple income types, such as:

• Grants/Subsidies: Financial assistance provided by the central government.
• Fees and Subscriptions: Revenues from sources like RTI fees, tender fees, sales of scrap, PVC cards, and service charges for authentication, enrolment, and updates.
• Interest Income: Earnings generated from term/fixed deposits and bank accounts.

This tax relief will be applicable for the assessment years from 2024-2025 to 2028-2029.

Consequently, the central government grants and subsidies received, as well as fees and subscriptions (including RTI fees, tender fees, sales of scrap, and PVC cards), and service charges for authentication, enrolment, and updates, along with interest on term/fixed and bank deposits, will all be exempt from income tax for UIDAI. The CBDT issued a formal notification to this effect under the Ministry of Finance.

The notification specifies that this exemption will apply for the assessment years 2024-2025 through 2028-2029.

Conditions for Exemption

This tax exemption is contingent on UIDAI not engaging in any commercial activities during the exemption period. Additionally, the types of income specified must remain consistent throughout the financial years covered by this exemption.

UIDAI is a statutory authority established under the Aadhaar Act of 2016, with the mandate to ensure compliance with the Act and to formulate relevant regulations and rules.

The tax exemption will remain effective provided that UIDAI refrains from commercial activities and that the nature of the specified income remains unchanged throughout the specified financial years.

This tax relief offers UIDAI financial flexibility, enabling it to concentrate on its primary mission of managing and securing Aadhaar-related services. The exemption highlights the government's support for UIDAI's role in providing a unique identification system to India's residents.