The Delhi High Court has granted interim relief to Supreme Court and High Court judges, allowing them income tax exemption on allowances including residence, leave travel concession and conveyance, following a plea that raised concerns over judicial independence.
The relief came on a petition by the Delhi Tax Bar Association, which had challenged an Office Memorandum issued by the Central Board of Direct Taxes (CBDT) on September 12, 2025, according to which tax treatment for judges’ allowances would apply only under the old tax regime.
The association argued that this amounted to interference with the independence of the judiciary.
Here’s what the CBDT memorandum said
Under Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954, and Section 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958, certain allowances given to judges are kept outside the scope of taxable salary.
These include a rent-free residence, conveyance, sumptuary allowance and leave travel concession.
The CBDT memorandum clarified that this treatment would continue only for judges who opt for the old tax regime. Judges who choose the new regime under Section 115BAC(1A) of the Income Tax Act, 1961, would not get the same treatment, meaning these allowances would be added to taxable income.
Interim order
A bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta took the view that rules specific to judges override the Income Tax Rules, and held that the matter needed further consideration. The Income Tax Department was directed not to process the returns filed under this arrangement until the next hearing.
