Section 10(20) → Section 12
Income of Local Authority
Quick Answer
Section 10(20) of the Income Tax Act, 1961 (Income of Local Authority) corresponds to Section 12 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 10(20)
Section 10(20) of the 1961 Act sets out the rules on income of local authority. Exempts specific income (like water/electricity supply outside jurisdiction, or house property) of a local authority (Panchayat, Municipality).
From 1st April 2026, the same subject sits at Section 12 of the Income-tax Act, 2025 — retained and renumbered as Section 12 of the Income-tax Act, 2025. Retained verbatim. Ensures that grass-root level government bodies do not pay income tax on their public utility operations.
For Section 10(20), the practical impact is rated High. Protects municipal corporations from tax liabilities.
Sec 10(20)
Provision Summary
Exempts specific income (like water/electricity supply outside jurisdiction, or house property) of a local authority (Panchayat, Municipality).
Sec 12
Provision Summary
Retained verbatim. Ensures that grass-root level government bodies do not pay income tax on their public utility operations.
Key Changes & Highlights
- Definition of 'Local Authority' strictly mapped to constitutional amendments.
Frequently Asked Questions
What is Section 10(20) of the Income Tax Act, 1961 about?
Section 10(20) of the Income Tax Act, 1961 covers income of local authority. Exempts specific income (like water/electricity supply outside jurisdiction, or house property) of a local authority (Panchayat, Municipality).
Which section replaces Section 10(20) in the Income-tax Act, 2025?
Section 10(20) of the Income Tax Act, 1961 maps to Section 12 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained verbatim. Ensures that grass-root level government bodies do not pay income tax on their public utility operations.
What is the impact of the change to Section 10(20) under the new tax code?
The transition impact for Section 10(20) is rated High. Protects municipal corporations from tax liabilities.
What should I watch out for when Section 10(20) moves to the 2025 code?
Definition of 'Local Authority' strictly mapped to constitutional amendments. These points are specific to Section 10(20) (Income of Local Authority).
Disclaimer: This mapping of Section 10(20) (Income of Local Authority) to Section 12 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 10(20) is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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