Supreme Court’s approach to creamy layer plea in ST income-tax exemption under Section 11

Background of the writ petition

A writ petition under Article 32 of the Constitution was filed in the Supreme Court in Ashwini Kumar Upadhyay Vs Union of India & Ors. (Supreme Court of India). The petitioner, appearing in person, challenged the manner in which income-tax exemption is granted to Scheduled Tribes in specified areas.

The challenge specifically related to the exemption available to Scheduled Tribes under Section 11 read with Serial No. 19 of Schedule III of the **Income-Tax Act, 2025`. The petitioner argued that the current framework results in a blanket tax exemption, without distinguishing between economically weaker Scheduled Tribe individuals and those who are financially well-off.

Reliefs sought before the Supreme Court

Primary prayer – introduction of creamy layer concept

The principal relief sought was a direction to the Union Government to introduce a “creamy layer” filter in the income-tax exemption provided to Scheduled Tribes under:

  • Section 11,
  • read with Serial No. 19 of Schedule III of the Income-Tax Act, 2025.

The petitioner contended that:

  • The existing exemption should not automatically extend to wealthy or elite members of Scheduled Tribes.
  • The benefit should be ring-fenced so that only economically disadvantaged Scheduled Tribe individuals can claim the exemption.
  • A mechanism akin to the creamy layer exclusion (as seen in reservation jurisprudence) should be introduced for the income-tax exemption as well.

Alternative constitutional challenge

In the alternative, the petitioner sought a declaration that the blanket tax exemption granted under:

  • Section 11,
  • Serial No. 19 of Schedule III of the Income-Tax Act, 2025,

was unconstitutional on the following grounds:

  • It was alleged to be manifestly arbitrary and irrational.
  • It was claimed to violate:
    • Article 14 (equality before law),
    • Article 15 (prohibition of discrimination),
    • Article 19(1)(g) (freedom to practise any profession, or to carry on any occupation, trade or business),
    • Article 21 (right to life and personal liberty),
    • Article 27 (freedom as to payment of taxes for promotion of any particular religion).

On this basis, the petitioner requested that the Court declare the exemption provision void and inoperative.

Residual relief

The petitioner also requested that the Court pass any additional directions or orders it considered appropriate, having regard to the facts of the case and in the interest of justice.

Hearing before the Supreme Court

The Supreme Court heard Shri Ashwini Kumar Upadhyay, the petitioner-in-person, at considerable length. The Court allowed the petitioner to fully present his submissions on: