The Central Board of Direct Taxes (CBDT) on June 16, 2022 has issued the Income-tax (Seventeenth Amendment), Rules, 2022 to further amend the Income-tax Rules,1962.
The following amendments have been made:
• In Rule 21AI, which specifies Computation of exempt income of specified fund for the purposes of clause (4D) of section 10, sub-rule 2A has been inserted, namely:
“(2A) The income attributable to units held by non-resident (not being the permanent establishment of a non- resident in India) in a specified fund shall not be exempt under clause (4D) of section 10 of the Act unless the specified fund complies with sub-rule (2).”
• Rule 21AIA, which specifies Other conditions required to be fulfilled by a specified fund referred to in clause (4D) of section, has been inserted,namely:
“21AIA. Other conditions required to be fulfilled by a specified fund referred to in clause (4D) of section 10 of the Act.—(1) For the purposes of the proviso to item (III) of sub-clause (i) of clause (c) of the Explanation to clause (4D) of section 10 of the Act, the “other conditions” required to be fulfilled by a specified fund shall be that —
(a) the unit holder of the specified fund, other than the sponsor or manager of such fund, who becomes a resident under clause (1) or clause (1A) of section 6 of the Act during any previous year subsequent to the previous year in which such unit or units were issued, shall cease to be a unit holder of such specified fund within a period of three months from the end of the previous year in which he becomes a resident;
(b) for the purposes of clause (a), the specified fund shall maintain the following documents in respect of its unit holders,—
I. name of the unit holder;
II. tax identification number of the unit holder in the country of residence at the time the units were issued;
III. permanent account number, if available;
IV. total number of units held;
V. total value of units held;
VI. whether unit holder is a sponsor or a manager;
VII. the previous year in which the unit holder became resident and; date of exit from specified fund.
(2) The specified fund shall certify that it has fulfilled the conditions under sub-rule (1) and furnish
information in respect of units held by residents in the annual statement of exempt income in Form No. 10-IG.
(3) The income attributable to units held by non-resident (not being the permanent establishment of a non- resident in India) in a specified fund shall not be exempt under clause (4D) of section 10 unless the specified fund complies with sub-rule (2).
Explanation.-For the purpose of this rule, “specified fund” shall have the same meaning as assigned to it in sub-clause (i) of clause (c) of the Explanation to clause (4D) of section 10 of the Act.”;
• In rule 21AJ, which specifies Determination of income of a specified fund attributable to units held by non-residents under sub-section (1A) of section 115AD, sub-rule 3A has been inserted, namely:
“(3A) The income of a specified fund referred to in clause (a) and clause (b) of sub-section (1) of section 115AD, attributable to the units held by a non-resident (not being the permanent establishment of a non-resident in India), shall not be eligible for tax rates specified in section 115AD unless it furnishes the annual statement of income eligible for concessional taxation in Form No. 10-IH in accordance with the provision of sub- rule (3).”
• In rule 21AJA, which specifies Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Income Tax Act, 1961, sub-rule 3A has been inserted, namely:
“(3A) The income of a specified fund attributable to an eligible investment division shall not be exempt under clause (4D) of section 10 unless it furnishes the annual statement of exempt income in Form No. 10-IK and the report of audit in Form 10-IL in accordance with the provisions of sub-rule (2).”
• In Rule 21AJAA, which specifies Determination of income of a specified fund attributable to the investment division of an offshore banking unit under sub-section (1B) of section 115AD of the Income Tax Act, 1961, sub-rule 2A has been inserted, namely:
“(2A) The income of an eligible investment division referred to in clause (a) and clause (b) of sub-section (1) of section 115AD shall not be eligible for tax rates specified under section 115AD unless the eligible investment division furnishes an annual statement of income, eligible for taxation under sub-section (1B) of section 115AD of the Act, in Form No. 10-IK in accordance with sub-rule (2).”.
• Form No.10-IG, which specifies Statement of exempt income under clause (4D) of section 10 of the Income-tax Act, 1961 has been substituted.
[Notification No. G.S.R. 455(E)]
