Indian Income Tax | Exempt Income

Income Tax Exemption under Section 10(19A): Annual Value of a Former Ruler's Palace

Section 10(19A) of the Income-tax Act, 1961 provides a narrowly defined exemption for the annual value of one qualifying palace occupied by a former ruler of an Indian State. The exemption depends on the property's historical tax-exempt status and the statutory conditions.

Eligible assesseeA qualifying former ruler (individual) of an Indian State

Nature of incomeAnnual value of a qualifying palace in the ruler's occupation

Extent of exemptionEntire annual value of one eligible palace

Relevant provisionSection 10(19A), Income-tax Act, 1961

What does Section 10(19A) provide?

Section 10(19A) excludes from total income the annual value of any one palace in the occupation of a Ruler, where that palace's annual value was exempt from income tax before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971 under one of the specified historical taxation-concession orders.

The provision is not a general exemption for royal properties, historic buildings or all residences owned by former rulers. It applies only where each statutory requirement is met.

Eligibility and conditions for exemption

Eligible person: The claimant must be a ruler covered by the statutory provision; ordinary property owners are not eligible merely because a building is called a palace.
Occupation: The palace must be in the occupation of that ruler.
One-palace limit: The exemption applies to the annual value of only one qualifying palace, not every palace occupied or owned.
Historical exemption: The palace's annual value must have been exempt before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971 under the Merged States (Taxation Concessions) Order, 1949; the Part B States (Taxation Concessions) Order, 1950; or the Jammu and Kashmir (Taxation Concessions) Order, 1958, as applicable.

Meaning of annual value

Annual value is a concept used in determining income from house property. For Section 10(19A), the qualifying annual value is excluded from taxable total income. This exemption concerns the annual value of the specified palace; it does not automatically exempt rental receipts, business income, capital gains or other income arising from the property.

Historical background and the 1972 proviso

The Constitution (Twenty-sixth Amendment) Act, 1971 abolished the constitutional recognition of former rulers and their privy purses. Section 10(19A) preserves a limited, historically conditioned tax exemption for one palace. Its proviso separately allowed the annual value of every qualifying palace occupied by the ruler to be exempt for the assessment year beginning 1 April 1972. That proviso is historical and does not remove the one-palace restriction for later years.

Documents and verification

A claimant should retain evidence of the ruler's status, the palace's occupation, identification of the single palace claimed, and records establishing exemption under the relevant pre-1971 concession order. Whether the conditions are satisfied depends on the particular facts and applicable law.

Official legal references

Current-law note: The provision discussed here is Section 10(19A) of the Income-tax Act, 1961. The Income-tax Act, 2025 is relevant to tax years beginning on or after 1 April 2026; the applicable provision and transitional rules should be checked for the tax year concerned. This article does not assume that a section number from the 1961 Act remains unchanged in the 2025 Act.

Frequently asked questions

Is the annual value of every palace exempt?

No. The continuing exemption under Section 10(19A) is limited to one qualifying palace. The special rule for every eligible palace related only to assessment year 1972-73.

Can any owner of a heritage palace claim the exemption?

No. Ownership of a heritage palace alone is insufficient. The claimant and property must satisfy the specific conditions of Section 10(19A).

Is the exemption limited to a fixed rupee amount?

No fixed monetary ceiling is stated for the annual value of the one qualifying palace. The exemption is nevertheless restricted by the eligibility, occupation and historical-status conditions.

Reviewed: 10 October 2026. This is general tax information, not an individual tax determination.