Section 10(26AAB): Income Tax Exemption for Agricultural Produce Market Committees and Boards
Section 10(26AAB) of the Income-tax Act, 1961 addresses exemption for income of an Agricultural Produce Market Committee (APMC) or Board established under law to regulate the marketing of agricultural produce. This guide explains eligibility, the scope of income covered and the importance of applying the legislation for the correct tax year.
Eligible entity: An Agricultural Produce Market Committee or Board constituted under a law.
Purpose: Regulation of the marketing of agricultural produce.
Income covered: Any income of the qualifying committee or board within the scope of the clause.
Extent: Entire qualifying income, subject to the relevant statutory provision and tax period.
What is Section 10(26AAB)?
Section 10 of the Income-tax Act, 1961 specifies categories of income that do not form part of total income. Clause 10(26AAB) provides for exemption in respect of any income of an Agricultural Produce Market Committee or Board constituted under a law for the purpose of regulating the marketing of agricultural produce.
The key requirement is the committee's or board's statutory constitution and regulatory purpose. A private trader, warehouse, produce broker or ordinary agricultural marketing business is not eligible merely because it handles farm products.
Who is eligible for the exemption?
The eligible assessee is an Agricultural Produce Market Committee or Board, commonly called an APMC or agricultural marketing board. It must be constituted under applicable legislation, usually a state agricultural produce marketing law, and have the legal purpose of regulating the marketing of agricultural produce.
Depending on the state legislation, such bodies may administer notified market areas, market yards, licensing and market infrastructure. The governing Act, establishment notification and functions of the entity should be examined to establish that it meets the statutory description.
Nature and amount of exempt income
| Eligible assessee | Agricultural Produce Market Committee or Board constituted under law. |
|---|---|
| Qualifying purpose | Regulating the marketing of agricultural produce. |
| Nature of income | Any income of an eligible committee or board, within the wording of the provision applicable to the tax year. |
| Amount exempt | Entire qualifying income, subject to statutory eligibility and applicability. |
| Essential evidence | Relevant state Act, constitution or notification, accounts and documentation establishing statutory status and activities. |
Income may arise from market fees, licence fees, rentals or other receipts in connection with the committee's activities. The statutory exemption is not restricted to a single receipt category; nevertheless, the entity must qualify and the applicable legislation must be verified.
Conditions for claiming exemption
- Constitution under law: The committee or board must be created or constituted under a valid law, rather than simply registered as a private association.
- Regulatory object: Its legal purpose must include regulating the marketing of agricultural produce.
- Correct legal identity: Confirm that the assessee claiming exemption is the statutory committee or board itself.
- Supporting records: Retain the governing statute, establishment notifications, relevant orders, audited financial statements and income details.
- Tax-year verification: Apply the statutory wording, amendments and transitional provisions relevant to the income period concerned.
Meaning of agricultural produce marketing regulation
Regulation of agricultural produce marketing generally refers to statutory oversight of the sale and purchase of notified farm commodities through regulated markets. State legislation may provide for market committees, market yards, market charges, licences, infrastructure and supervision. The exact powers and definition of agricultural produce vary from state to state.
Illustrative situations
Example 1: A market committee is constituted under a state agricultural produce marketing statute and administers a regulated market. Its income can fall within the historical Section 10(26AAB) exemption when the statutory tests and applicable year are satisfied.
Example 2: A private company buys and resells vegetables at wholesale markets. It is not a statutory Agricultural Produce Market Committee or Board and cannot rely on Section 10(26AAB) merely because it trades agricultural produce.
Example 3: A body calls itself a marketing board but was formed by a private agreement. Its name alone does not satisfy the requirement that it be constituted under law.
Income-tax law applicable from April 2026
Section 10(26AAB) is a reference to the Income-tax Act, 1961. The Income-tax Act, 2025 came into effect on 1 April 2026. For tax year 2026-27 onward, check the corresponding exemption provisions of the 2025 Act and the relevant transitional arrangements rather than assuming that the old section number remains operative. For earlier periods, examine the 1961 Act as amended for the year in question.
Frequently asked questions
Does Section 10(26AAB) cover every agricultural business?
No. It concerns an Agricultural Produce Market Committee or Board constituted under law to regulate agricultural produce marketing.
Is the exemption limited to market fees?
The historical provision refers to any income of an eligible committee or board, not only market fees, subject to the operative legal wording.
Does an APMC need to prove statutory status?
Yes. The governing law, constitution or establishment notification and regulatory purpose are central to eligibility.
Which income-tax law applies from April 2026?
The Income-tax Act, 2025 applies from 1 April 2026. Check the corresponding provision and any transitional rules for the relevant tax year.
Official sources and further reading
- Income Tax Department: Income-tax Act, 1961 (historical Section 10(26AAB) and amendments).
- India Code: Central and State legislation (Income-tax Act, 2025 and applicable marketing laws).
- Income Tax Department e-Filing Portal.
- National Agriculture Market (e-NAM) (background on regulated agricultural markets).
Explore related Businesswonder articles on tax-exempt income, Section 10 exemptions and Chapter VI-A deductions.
This page provides general information. Eligibility and tax treatment depend on the law in force for the relevant tax year and the legal status of the particular committee or board.