Indian income tax | Exempt income | Updated October 2026
Section 10(26) Tax Exemption for Scheduled Tribe Members in India
Section 10(26) of the Income-tax Act, 1961 provides a conditional exemption for specified income of certain members of Scheduled Tribes residing in designated areas. It is not the exemption provision for the Employees State Insurance Corporation (ESIC).
What does Section 10(26) provide?
Under the Income-tax Act, 1961, Section 10(26) excludes certain income from total income for an individual who is a member of a Scheduled Tribe as defined in Article 366(25) of the Constitution and who resides in a qualifying area identified by the provision. The exemption covers income accruing or arising from any source in the specified area or State, as applicable, and income by way of dividend or interest on securities, subject to the statutory wording.
Eligibility requirements under Section 10(26)
- Scheduled Tribe status: The individual must be a member of a Scheduled Tribe as defined for constitutional purposes.
- Residence: The individual must reside in one of the areas expressly covered by the statutory provision, including specified tribal areas in the North-Eastern region and other locations identified by law.
- Qualifying income: The income must be of the nature and geographic source covered by the clause, or fall within its distinct dividend or securities-interest category.
- Evidence: Relevant tribal-status documents, proof of residence, and records establishing the source and nature of income should be retained.
The geographical coverage is determined by the actual legislative text and any applicable amendments. Being a Scheduled Tribe member alone does not make all income automatically exempt throughout India.
Which income may be exempt?
| Income category | General treatment under Section 10(26) |
|---|---|
| Income from a source in the specified area | May qualify when the individual's tribal status, residence and statutory source conditions are satisfied. |
| Dividend income | Specifically mentioned in the clause; applicability must be checked against the law for the relevant year. |
| Interest on securities | Specifically mentioned in the clause; ordinary bank-deposit interest should not automatically be treated as interest on securities. |
| Income from outside the specified area | Not generally exempt merely because the recipient is a Scheduled Tribe member; examine the statutory exception and facts. |
ESIC exemption: Section 10(25A), not Section 10(26)
The Employees State Insurance Fund is established under the Employees' State Insurance Act, 1948. Under Section 10(25A) of the Income-tax Act, 1961, any income of that Fund is excluded from total income. This is a fund-level exemption and should not be confused with an exemption for all employees or all payments associated with ESIC.
| Point | ESI Fund exemption under Section 10(25A) |
|---|---|
| Eligible entity | Employees State Insurance Fund established under the Employees' State Insurance Act, 1948. |
| Nature of income | Any income of the qualifying Fund. |
| Extent of exemption | Entire qualifying Fund income under the statutory provision. |
| Condition | Income must be that of the statutory Employees State Insurance Fund, rather than an unrelated person or entity. |
For institutional information and statutory updates, consult the Employees' State Insurance Corporation official website.
Section 10(26) versus Section 10(25A)
These clauses protect different taxpayers and types of income. Section 10(26) concerns an eligible individual belonging to a Scheduled Tribe, subject to geographic and income conditions. Section 10(25A) concerns income of the Employees State Insurance Fund. Neither clause should be used as a substitute for the other.
Income-tax Act, 2025 and tax years from April 2026
The Income-tax Act, 2025 applies from 1 April 2026. The section numbers discussed here refer to the Income-tax Act, 1961. For tax years governed by the 2025 Act, review the corresponding provisions and updated rules rather than assuming the old numbering continues unchanged. Earlier-year assessments and proceedings may still require the 1961 Act and relevant transitional provisions.
Official legislation and reference links
- India Code: Central Acts and statutory text - verify the Income-tax Acts and Employees' State Insurance Act.
- Income Tax Department: Income-tax Act - statutory provisions and related material.
- Income Tax e-Filing portal - current tax filing and compliance guidance.
- Employees' State Insurance Corporation - official ESIC information.
For other exemptions, see income exempt under Section 10 and the guide to tax-free income.
Frequently asked questions
Is Section 10(26) an exemption for the Employees State Insurance Corporation?
No. Section 10(26) of the Income-tax Act, 1961 concerns specified income of qualifying members of Scheduled Tribes. The Employees State Insurance Fund is dealt with separately under Section 10(25A).
Is all income of a Scheduled Tribe member exempt?
No. The person must meet the residence and Scheduled Tribe conditions, and the income must fall within the categories specified by the provision.
Does income earned outside the specified area qualify?
Income must accrue or arise from a source in the specified area, except for the separate statutory category of dividend or interest on securities. The precise facts and law for the relevant year matter.
Is the ESIC fund exempt from income tax?
Section 10(25A) of the 1961 Act exempts income of the Employees State Insurance Fund set up under the Employees State Insurance Act, 1948; it is not Section 10(26).
This article provides general information. Confirm the statutory text, tax year, eligibility and documentary evidence for the particular case.