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CS Executive · Capital Market and Securities Laws · Securities and Exchange Board of India

A tax consultant says SEBI must pay income-tax on interest earned on its funds. Based on the SEBI Act, 1992, how should this be answered?

The consultant is wrong. Section 25 provides that, despite the Income-tax Act, 1961 and other tax laws, the Board is not liable to pay wealth-tax, income-tax or any other tax on its wealth, income, profits or gains.

  1. AIncorrect; notwithstanding the Income-tax Act, 1961, the Board is not liable to pay wealth-tax, income-tax or any other tax on its wealth, income, profits or gainsCorrect
  2. BCorrect; SEBI is taxed like any other body corporate
  3. CIncorrect, but only for income from securities market fees
  4. DCorrect, but only at a concessional rate fixed by the Board

Explanation

Section 25 overrides the Income-tax Act, 1961 and other tax enactments, so the Board (and the existing board up to establishment of the Board) is not liable to wealth-tax, income-tax or any other tax on its wealth, income, profits or gains. No limitation to fee income or concessional rate is stated.

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