The CBDT vide Notification No. 32/2021, dated April 15, 2021 issued ‘Income-tax (10th Amendment) Rules, 2021’ amending the Income-tax Rules, 1962 (“Income-tax Rules”) to amend following:
- Amendment in Rule 2DB of the Income-tax Rules which prescribes the other conditions to be satisfied by the pension fund for the purpose of Section 10(23FE) of the Income-tax Act, 1961 (“Income-tax Act”):
- Inserted proviso in clause (iii)
- Omitted clause (iv)
- Inserted Explanation after clause (vi)
Amended Rule 2DB of the Income-tax Rules 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: –
(i) it is regulated under the law of a foreign country including the laws made by any of its political constituents being a province, state or local body, by whatever name called, under which it is created or established, as the case may be;
(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;
(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;
(iv) it does not undertake any commercial activity whether within or outside India;
(v) it shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB;
(vi) it shall file return of income on or before the due date specified under sub-section (1) of section 139 and furnish along with such return a certificate in Form No. 10BBC in respect of compliance to the provisions of clause (23FE) of section 10, during the financial year, from an accountant as defined in the Explanation below sub-section (2) of section 288.
Explanation: For the purposes of this rule, “loan and borrowing” shall have the same meaning as assigned to it in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10.”
- Substituted the word “Explanation” with the word “Explanation 1” in Rule 2DC(1) of the Income-tax Rules which prescribes the guidelines for notification under Section 10(23FE) of the Income-tax Act. Amended Rule 2DC(1) of the Income-tax Rules reads as under:
“2DC. Guidelines for notification under clause (23FE) of section 10.- (1) For the purposes of notification under sub-clause (iv) of clause (c) of Explanation 1 to the clause (23FE) of section 10, the pension fund shall make an application in Form No. 10BBA enclosing therewith relevant documents and evidence, to the,-
(i) Member (Legislation), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi during the financial year 2020-2021;
(ii) Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division during the other financial years.”
- Substituted Form No 10BBA in Appendix II of the Income-tax Rules:
“Form No. 10BBA
[See sub-rule (1) of rule 2DC]
Application for notification under sub-clause (iv) of clause (c) of Explanation 1 to the clause (23FE) of section 10 of the Income-tax Act, 1961
(Pension Fund)
To,
The Member (Legislation), CBDT (For application during Financial Year 2020-2021)**/
The Member (Having control over the Foreign Tax and Tax Research Division) (For application during other financial year)**
Madam/ Sir,
The applicant is a Pension Fund and interested in making investment in terms of clause (23FE) of section 10 of the Income-tax Act, 1961 and therefore, it is requested that necessary notification may kindly be issued, the details for which are as under:
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(a) Name of the Pension Fund |
: |
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(b) Address of the Pension Fund |
: |
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(c) Tax Identification Number of the country of residence |
: |
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(d) Country of residence |
: |
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(e) Permanent Account Number (PAN) |
: |
2. It is hereby certified that-
(a) the Pension Fund is created or established under the law of______ (please mention the name of the foreign country including any of its political constituents like province/ state/ local body etc.) and is regulated under that law;
(b) the Pension Fund is not liable to tax in the foreign country mentioned at (a) above or if liable to tax, exemption from taxation for all its income has been provided by such foreign country;
(c) the Pension Fund is responsible for administering or investing the assets for meeting the statutorily 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;
(d) 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 (c) above and no portion of the earnings or assets of the pension fund inures any benefit to any other private person barring any payment made to the creditors or depositors or loan or borrowing taken for purposes other than for making investment in India; and
(e) the Pension Fund does not participate in the day to day operations of investee ^ barring any monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director .
3. In support of the claims made above, the following documents are attached:
(a) documents constituting the Pension Fund and any later amendment thereto, and
(b) any other relevant document or information.
Verification*
I, _____________ , son/ daughter/ wife** of Shri _____________ , solemnly
declare that to the best of my knowledge and belief, the information given in this application and the annexures and documents, if any, accompanying it are correct and complete and particulars shown therein are truly stated.
2. I further declare that to the best of my knowledge; I have not concealed any fact or information which could be relevant for this application.
3. I also declare that I am making this application in my capacity as ____________ (designation) and that I am
holding PAN/ Aadhaar** _____ and I am competent to make this application and verify it.
Verified today the__________ day of_____________
Place
(Signature)
Name
Notes:
1. **Delete whichever is not applicable.
2. *To be signed by the person competent to verify the return of income under section 140 of the Income-tax Act, 1961.
3.^ An “investee” shall have the same meaning as in clause (i) of Explanation 2 to clause (23FE) of section 10 of the Income-tax Act, 1961.
4. ¥ loan and borrowing shall have the same meaning as in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Income-tax Act, 1961.”.
The Notification can be accessed at: https://www.incometaxindia.gov.in/communications/notification/notification_32_2021.pdf