The Central Board of Direct Taxes (CBDT) has notified the Core Settlement Guarantee Fund (CSGF) established by National Commodity Clearing Limited (NCCL) for income-tax exemption under Section 10(23EE) of the erstwhile Income-tax Act, 1961.
The notification, issued by the Ministry of Finance on July 7, 2026, grants tax-exempt status to the specified income of the fund for Assessment Years 2019-20 to 2026-27, subject to certain conditions.
Exemption Continues Despite Income-tax Act, 2025
Although the Income-tax Act, 1961 has been repealed and replaced by the Income-tax Act, 2025 with effect from April 1, 2026, the government clarified that various proceedings, rights, obligations, and exemptions under the old law continue to remain valid for earlier tax years.
Invoking the transitional provisions contained in Section 536 of the Income-tax Act, 2025, the Central Government has formally notified the Core Settlement Guarantee Fund (PAN: AAAJN1263G) set up by NCCL as an eligible fund for exemption under Section 10(23EE) of the 1961 Act.
What is a Core Settlement Guarantee Fund?
A Core Settlement Guarantee Fund is maintained by a recognised clearing corporation to safeguard the settlement mechanism in financial and commodity markets. The fund acts as a financial backstop to ensure smooth settlement of trades and mitigate risks arising from defaults by market participants.
Section 10(23EE) of the Income-tax Act, 1961 provides tax exemption on specified income earned by such funds, provided they satisfy prescribed conditions and are duly notified by the Central Government.
Conditions for Availing Exemption
The CBDT notification specifies that the exemption will remain available only if:
- The Core Settlement Guarantee Fund files its income-tax return in accordance with Section 139(4C) of the Income-tax Act, 1961.
- National Commodity Clearing Limited (NCCL) continues to be recognised as a clearing corporation by the Securities and Exchange Board of India (SEBI).
Non-Compliance May Lead to Withdrawal of Exemption
The notification further states that failure to comply with the prescribed conditions may result in:
- Withdrawal of the tax exemption granted under Section 10(23EE), and
- Initiation of proceedings under the Income-tax Act, 1961.
Retrospective Benefit from AY 2019-20
The exemption notification has been made applicable retrospectively from Assessment Year 2019-20 up to Assessment Year 2026-27. According to the explanatory memorandum issued by the CBDT, the retrospective effect does not adversely affect the interests of any person and has been granted from the year in which the application was filed before the tax authorities.
The move provides tax certainty to NCCL's Core Settlement Guarantee Fund and ensures continuity of the exemption framework during the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.
Click here to view/download the official copy of the notification
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