The CBDT vide Notification No. 50/2023 dated July 17, 2023 has issued the Income-tax (Twelfth Amendment) Rules, 2023, to amend the Income-tax Rules, 1962 (“the IT Rules”). The amendment aims to provide exemptions and regulations regarding certain income and financial instruments for non-residents.
(i) in rule 21AK, for sub-rule (1), the following sub-rule shall be substituted, namely:—
“(1) The income accrued or arisen to, or received by, a non-resident as a result of
(a) transfer of non-deliverable forward contracts or offshore derivative instruments or over-thecounter derivatives; or
(b) distribution of income on offshore derivative instruments,
under clause (4E) of section 10 of the Act, shall be exempted subject to fulfilment of the following conditions, namely:—
(i) the non-deliverable forward contract or offshore derivative instrument or over-the-counter derivative is entered into by the non-resident with an offshore banking unit of an International Financial Services Centre which holds a valid certificate of registration granted under International Financial Services Centres Authority (Banking) Regulations, 2020 by the International Financial Services Centres Authority; and
(ii) such contract, instrument or derivative is not entered into by the non-resident through or on behalf of its permanent establishment in India.”;
(ii) in rule 114AAB, in the Explanation, for clause (a), the following clause shall be substituted, namely:—
(a) ‘specified fund’ means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019) and which is located in any International Financial Services Centre or a specified fund referred to in sub-clause (i) of clause (c) of Explanation to clause (4D) of section 10;’
(iii) Form No. 10CCF in Appendix II of the IT Rules is substituted with a new form.
These amendments are effective from the date of their publication in the Official Gazette.
The Notification can be accessed at: https://egazette.gov.in/WriteReadData/2023/247391.pdf
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