The central government has granted income tax exemption to Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), a body set up to record security interest of lenders on assets. CERSAI was set up to keep a central record of the lien lenders have on collaterals in order to prevent people from borrowing against the same asset from different lenders fraudulently.
The Central Board of Direct taxes (CBDT), in an order, said the relief was being granted under clause 46 of section 10 of the Income Tax Act. This provides for the government to exempt specified income of entities such as an authority, Board, Trust or Commission from the taxable income subject to riders.
These entities have to be set up under a central, state or other laws or be set up by government for regulating or administering any activity for the benefit of the general public. Also, these entities taking tax benefit cannot be engaged in a commercial activity.
CBDT said CERSAI has been notified under this provision with respect to certain income it earns. That includes fee income from security interest transaction, fee income from transactions on Central KYC (CKYC) records registry, right to information (RTI) application fee and interest income earned on fixed deposits and on these incomes.
The benefit is available subject to the condition that the entity will not engage in any commercial activity, activities and the nature of the specified income shall remain unchanged throughout the financial years and shall file return of income as mandated under law. This order is effective for the financial years 2018-2019 to 2022-2023, the order said.
Official copy of the notification has been mentioned below
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th September, 2022
S.O. 4154(E).—In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘Central Registry of Securitisation Asset Reconstruction and Security Interest of India’ (PAN AAECC5770G), a body set up under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 (No.54 of 2002) in respect of the following specified income arising to that body, namely:-
(a) fee income from Security Interest transaction;
(b) fee income from transactions on Central KYC (CKYC) Records Registry;
(c) RTI application fee; and
(d) interest income earned on fixed deposits and on (a) to (c) above.
2. This notification shall be effective subject to the conditions that Central Registry of Securitisation Asset Reconstruction and Security Interest of India, -
(a) shall not engage in any commercial activity;
(b) activities and the nature of the specified income shall remain unchanged throughout the financial years; and
(c) shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961.
3. This notification shall be deemed to have been applied for the financial years 2018-2019, 2019- 2020, 2020-2021 and 2021-2022 and shall be applicable with respect to the financial year 2022-2023.
[Notification No. 107/2022/F. No. 300196/25/2018-ITA-I]
SOURABH JAIN, Under Secy.
Explanatory Memorandum
It is certified that no person is being affected adversely by giving retrospective effect to this notification.
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