Provision for computation of income of specified fund, attributable to investment division of an offshore banking unit introduced vide Income tax (1st Amendment), Rules, 2022

CBDT

On January 14, 2022, the Central Board of Direct taxes notifies the Income tax (1st Amendment) , Rules further to amend the Incometax Rules,1962. They will come into force from April 01, 2022.

 

Key Features:

  • Provision relating to 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 Act has been introduced. The provision specifies a formula for the computation.


21AJA. 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 Act (1) For the purposes of clause (4D) of section 10 of the Act, income of specified fund attributable to the investment division of an offshore banking unit shall be computed in accordance with the following formula, namely:


A
+B+C+D
where ,

A
= any income accrued or arisen to, or received by the eligible investment division as a result of transfer of a capital asset referred to in clause (viiab) of section 47 of the Act held by it, on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange;
B
= any income accrued or arisen to, or received by the eligible investment division as a result of transfer of securities held by it (other than shares in a company resident in India);

C= any income accrued or arisen to, or received by the eligible investment division from securities held by it and issued by a nonresident (not being a permanent establishment of a nonresident in India) and where such income otherwise does not accrue or arise in India;
D
= any income accrued or arisen to, or received by the eligible investment division from a securitisation trust which is chargeable under the head profits and gains of business or profession”.


  • Provision relating to ‘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 Act‘ has been introduced.

21AJAA. 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 Act
(1) For the purposes of subsection (1B) of section 115AD of the Act, income of a specified fund, being the investment division of an offshore banking unit shall be computed in accordance with the following formula, namely:

A+B+C+D+E+F
where,

A
= income by way of long term capital gain referred to in clause (b) of subsection (1) of section 115AD, accrued or arisen to, or received by the eligible investment division , as a result of transfer of a security referred to in section 112A of the Act and held by such investment division;
B
= income by way of long term capital gain referred to in clause (b) of subsection (1) of section 115AD, accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 112A of the Act, and held by such investment division;
C
= income by way of short term capital gain referred to in clause (b) of subsection (1) of section 115AD, accrued or arisen to, or received by the eligible investment division as a result of transfer of security referred to in section 111A of the Act and held by such investment division;
D
= income by way of short term capital gain referred to in clause (b) of subsection (1) of section 115AD, accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 111A of the Act, and held by such investment division;
E
= income from securities referred to in clause (a) of subsection (1) of section 115AD of the Act, being in the nature of interest referred to in section 194LD of the Act, held by the eligible investment division;
F
= income from securities, held by the eligible investment division, as referred to in clause (a) of subsection (1) of section 115AD of the Act and not included in item E above.

  • Following forms shall be substituted:
    1. Forms 10IK relating to Annual Statement of Exempt Income under subrule (2) of rule 21AJA and taxable income under subrule (2) of rule 21AJAA;

    2. Form 10IL relating to Verification by an Accountant under subrule (3) of rule 21AJA.

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