Section 48 of RBI Act : Section 48: Exemption Of Banks From Income-Tax And Super-Tax

Explanation using Example

Imagine a scenario where the Reserve Bank of India (RBI) generates income through its various operations, such as lending activities or investments. Normally, a corporation would be required to pay income tax on its profits. However, due to Section 48 of The Reserve Bank of India Act, 1934, the RBI is exempt from paying income tax or super-tax on these earnings. So, if the RBI makes a profit of INR 10 billion in a financial year, unlike other entities, it would not have to pay income tax on this amount because of the specific exemption granted to it by this section of the Act.