Section 2(36A) Income-tax: Public Sector Company - Meaning

The Income Tax Act, 1961, uses clear definitions to avoid confusion in tax rules. One important term is public sector company. This term matters because it affects tax benefits, exemptions, and compliance for entities linked to the government. Below, we explain what this term means under the Income Tax Act, 1961, and the Companies Act, 2013, with updated references.

Definition under Section 2(36A) of the Income Tax Act, 1961

Section 2(36A) of the Income Tax Act, 1961, defines a public sector company as:

Any corporation created by or under a Central, State, or Provincial Act.
A Government company as defined in section 617 of the Companies Act, 1956, unless stated otherwise.

This means public sector companies include entities formed by law at the central or state level and companies where the government has significant ownership. These companies are treated as public sector for tax purposes, ensuring consistent fiscal policies.

Definition of Government Company under the Companies Act, 2013

To understand the full scope, we look at the definition of a Government company under Section 2(45) of the Companies Act, 2013:

A company where at least 51 percent of the paid-up share capital is held by the Central Government, State Government, or both.
It also includes subsidiaries of such companies.

This ownership rule shows the government’s control, separating these companies from private firms and aligning them with public sector goals.

Statutory References and Updates

The reference in Section 2(36A) of the Income Tax Act to section 617 of the Companies Act, 1956 now corresponds to Section 2(45) of the Companies Act, 2013. This change happened when the 1956 Act was replaced by the 2013 Act. The meaning remains the same. As of October 26, 2025, there are no changes to these definitions. They continue to apply for tax and corporate governance purposes.