The Ministry of Finance has notified the Core Settlement Guarantee Fund (CSGF) set up by AMC Repo Clearing Limited for income-tax exemption under Section 10(23EE) of the Income-tax Act, 1961.
The notification, issued by the Central Board of Direct Taxes (CBDT) on 8 January 2026, grants tax-exempt status to specified income earned by the fund, with effect from Assessment Year 2024-25 onwards.
What the Notification Says
As per Notification No. 06/2026, the Central Government has formally recognised the Core Settlement Guarantee Fund (PAN: AAAJA3150B) for the purposes of clause (23EE) of Section 10. This provision exempts certain income of settlement guarantee funds created by recognised clearing corporations from income tax.
The exemption applies only to the specified income referred to in Explanation (iii) of Section 10(23EE), which broadly covers income arising from activities related to settlement guarantee mechanisms in financial markets.
Conditions Attached to the Tax Exemption
The notification makes the exemption conditional, requiring continued compliance with statutory and regulatory norms. Key conditions include:
- The Core Settlement Guarantee Fund must file its income-tax return under Section 139(4C) of the Income-tax Act.
- AMC Repo Clearing Limited must continue to remain a SEBI-recognised clearing corporation.
- All other conditions prescribed under Section 10(23EE) must be consistently followed.
Failure to meet these conditions could result in the withdrawal of the tax exemption.
Retrospective Effect Without Adverse Impact
An accompanying Explanatory Memorandum clarifies that the notification has been given retrospective effect, applicable from the year in which the application was made before the tax authorities.
Importantly, the government has certified that no person is adversely affected by this retrospective operation, addressing potential concerns around tax certainty and compliance.
Why This Matters
Settlement guarantee funds play a crucial role in maintaining stability and trust in financial markets, especially in repo and clearing operations. By extending tax exemption to the Core Settlement Guarantee Fund, the government reinforces its policy intent to support robust market infrastructure without imposing additional tax burdens on risk-mitigation mechanisms.
The move also aligns with earlier notifications issued for similar funds operated by recognised clearing corporations, ensuring consistency in tax treatment across market institutions.
Official copy of the notification has been attached
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