Beyond the Income-tax Act: Can Statutorily Mandated Revenue-Generating Activities Negate Educational Character under Section 10(23C)(iiiab)?

Swapnil Durgesh Tandulje

Beyond the Income-tax Act: Can Statutorily Mandated Revenue-Generating Activities Negate Educational Character under Section 10(23C)(iiiab)?

Author(s)	Mr. Swapnil Durgesh Tandulje
Country	India
Abstract	This paper examines whether a university or other educational institution claiming exemption under section 10(23C)(iiiab) of the Income-tax Act, 1961, loses its educational character by undertaking revenue-generating activities mandated, authorised or necessarily incidental to its constituting statute and regulatory framework. The issue is particularly relevant for agricultural, veterinary, medical and technical institutions, where teaching, research and extension functions inherently generate receipts through activities such as experimental farms, seed production, clinical facilities, testing laboratories and consultancy. Drawing on the statutory framework, specialised university legislation, regulatory materials and judicial authorities culminating in New Noble Educational Society, the paper argues that receipts or surplus are evidentiary rather than determinative of educational character. It proposes a Statutory Mandate-Functional Nexus Test to evaluate whether a disputed activity remains educational by examining its statutory basis, functional nexus with teaching, research or extension, operational character and financial application. The paper also analyses the Government-financing requirement under Rule 2BBB and the corresponding provisions of the Income-tax Act, 2025. It concludes that statutorily mandated activities do not become commercial merely because they generate receipts, although failure to satisfy the financing threshold may independently defeat the exemption.
Keywords	Section 10(23C)(iiiab), educational institution, revenue-generating activities, New Noble Educational Society, agricultural education, Income-tax Act, 2025.
Field	Sociology > Administration / Law / Management
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-07-24

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Beyond the Income-tax Act: Can Statutorily Mandated Revenue-Generating Activities Negate Educational Character under Section 10(23C)(iiiab)?

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