The CBDT vide Notification No. 37/2021 – Income-tax, dated April 26, 2021 issued the Income-tax (11th Amendment) Rules, 2021 to further amend the Income-tax Rules, 1962 (“Income-tax Rules”) with regard to conditions to be satisfied by the Pension Fund, in a following manner:
- Inserted a proviso to Rule 2DB(ii) of the Income-tax Rules with respect to condition of assets being administered or invested by Pension Fund as mention in clause (ii) shall deemed to be satisfied if certain condition specified therein are satisfied.
- Inserted a second proviso to Rule 2DB(iii) of the Income-tax Rules stating that provisions of clause (iii) shall not apply to earnings from assets referred in clause (ii), if the earning are credited either to the account of the Government of foreign country or to any other account designated by such Government so that no portion of the earnings inures any benefit to any private person.
- Substituted Form No. 10BBA (Application for notification under Explanation 1(c)(iv) to Section 10(23FE) of the Income-tax Act, 1961)
The amended Rule 2DB(ii) and (iii) of the Income-tax Rules now reads as under:
“2DB. Other conditions to be satisfied by the pension fund. –
For the purposes of clause (23FE) of section 10, the pension fund shall be required to satisfy the following other conditions, namely: –
(ii) it is responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
Provided that the condition in clause (ii) shall be deemed to have been satisfied with respect to assets being administered or invested, if the following conditions are satisfied; namely:-
(a) value of such assets is not more than ten per cent. of the total value of the assets administered or invested by such fund;
(b) such assets are wholly owned directly or indirectly by the Government of a foreign country; and
(c) such assets vests in the Government of such foreign country upon dissolution.
(iii) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (ii) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;
Provided that the provisions of clause (iii) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;
Provided further that the provisions of clause (iii) shall not apply to earning from the assets referred to in the proviso of clause (ii), if the said earning are credited either to the account of the Government of that foreign country or to any other account designated by such Government so that no portion of the earnings inures any benefit to any private person;”
The Notification can be accessed at: http://egazette.nic.in/WriteReadData/2021/226764.pdf