IRRI: CBDT excludes receipts from Chapter XIX, with conditions

The Central Government has notified that Chapter XIX of the Income-tax Act, 2025 will not apply to payments received by the International Rice Research Institute (IRRI), subject to specified privileges and immunities conditions. The Ministry of Finance’s notification, published in the Official Gazette on 28 October 2026, took effect that day.

Issued by the Central Board of Direct Taxes (CBDT) as Notification No. 138/2026, S.O. 5855(E), the measure invokes Section 400(1) of the Act as its enabling provision. It identifies IRRI as the recipient covered by the exclusion, rather than announcing a general relaxation for research institutions.

The notification makes the treatment conditional on the United Nations (Privileges and Immunities) Act, 1947, read with Ministry of External Affairs notification S.O. 3230(E), dated 3 October 2017. Those references form part of the terms of the exclusion; the October notification does not grant unconditional relief.

What the notification covers

The operative wording is that Chapter XIX’s provisions “shall not apply to payments received by International Rice Research Institute (IRRI)”, the Finance Ministry notification states. The direction concerns payments coming to the institute. It does not describe payments made by IRRI as the subject of the exclusion.

The wording also confines the measure to a specified chapter of the Income-tax Act. It does not declare IRRI exempt from every provision of the Act, or extend the same treatment to another organisation. Describing it as a blanket income-tax exemption would therefore go beyond what the notification says.

Nor does the notification set out a payment threshold, specify a monetary ceiling or provide a list of payment categories. Its operative provision identifies the recipient and the chapter that will not apply, while retaining the conditions drawn from the two referenced legal instruments.

Section 400(1) is the statutory authority the government cites for making this direction. The notification does not reproduce that section or the full contents of Chapter XIX. Its legal effect is expressed through the exclusion of the chapter, rather than through a schedule of revised tax rates.

The commencement clause states that the notification comes into force on its publication in the Official Gazette. The Gazette issue is dated 28 October 2026, establishing the start date separately from the older External Affairs notification on which the conditions depend. The new instrument specifies neither a retrospective commencement date nor an expiry date.

The 2017 date is thus a reference to an earlier instrument that must be read alongside the exclusion. It is not the date on which this notification takes effect.

The notification was issued in New Delhi under the Finance Ministry’s Department of Revenue and signed by Under Secretary Rajendra Kumar Meena. It appears in Part II, Section 3, Sub-section (ii) of the Gazette of India, Extraordinary, under file number 275/44/2026-IT(B).

How it fits into the tax-payment framework

The Income Tax Department’s “Tax Payments FAQ” provides the broader context for payment obligations under the Income-tax Act, 2025. The department says the new Act preserves the existing structure for paying tax, including tax deducted at source (TDS), tax collected at source (TCS), advance tax and self-assessment tax.

These are different methods of collecting or discharging tax. TDS involves withholding tax from a payment, while TCS involves collection at source under the applicable provisions. Advance tax concerns payments towards liability during the tax year; self-assessment tax is a way of discharging the taxpayer’s calculated liability. The department says the core obligation to pay tax through these methods continues under the new Act.

According to the FAQ, the new Act consolidates the earlier TDS provisions into Section 392 for salaries and Section 393 for other specified payments. The latter includes payments such as commission or brokerage, rent and payments on transfers of certain immovable property other than agricultural land.

The department says Section 393 uses separate tables for residents, non-residents and any person. Those tables identify the nature of the income or payment, the monetary threshold, the person responsible for deduction and the applicable rate. The FAQ describes the restructuring as a simplification of the law’s presentation rather than a broad change in policy.

The department also distinguishes obligations arising under the old and new Acts by the relevant payment or credit date. Its FAQ states that sums paid or credited on or before 31 March 2026 fall under the Income-tax Act, 1961, while the corresponding withholding provisions of the 2025 Act govern sums paid or credited on or after 1 April 2026.

For the payment categories discussed in its transition guidance, the department explains that the earlier event of credit or payment determines which Act applies. It also says that where tax was already deducted under the 1961 Act when a sum was credited, payment of the same sum under the new Act does not require another deduction.

That general transition is separate from the IRRI notification’s own commencement provision. The Finance Ministry has dated this particular exclusion from Gazette publication, not from the beginning of the new Act’s payment framework.

The department’s FAQ further says that rights, benefits, obligations and liabilities arising under the old Act continue to exist. The IRRI notification contains no separate direction cancelling earlier liabilities or setting out a refund process for tax already deducted.

The condition attached to the exclusion remains important to its application. The Finance Ministry’s notification cites the 1947 Act and the External Affairs notification of 3 October 2017 but does not reproduce their conditions. It establishes the Chapter XIX exclusion for payments received by IRRI; the detailed conditions must be read in those referenced instruments.