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Home Acts & Rules Bill Bills FINANCE BILL, 2020 Chapters List Chapter III DIRECT TAXES - Income-tax This
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Clause 6 - Amendment of section 9A. - FINANCE BILL, 2020

FINANCE BILL, 2020
Chapter III
DIRECT TAXES - Income-tax
  • Contents
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Amendment of section 9A.

6. In section 9A of the Income-tax Act, in sub-section (3),––

(a) in clause (c), the following proviso shall be inserted, namely:––

“Provided that for the purposes of calculation of the said aggregate participation or investment in the fund, any contribution made by the eligible fund manager during the first three years of operation of the fund, not exceeding twenty-five crore rupees, shall not be taken into account;”;

(b) in clause (j), in the first proviso, for the words “six months from the last day of the month of its establishment or incorporation, or at the end of such previous year, whichever is later”, the words “twelve months from the last day of the month of its establishment or incorporation” shall be substituted.

 



 

Notes on Clauses:

Clause 6 of the Bill seeks to amend section 9A of the Income-tax Act relating to certain activities not to constitute business connection in India.

Sub-section (3) of the said section provides for the conditions to be fulfilled for being an eligible investment fund.

Clause (c) of said sub-section provides that the aggregate participation or investment in the fund, directly or indirectly, by persons resident in India should not exceed five per cent. of the corpus of the fund.

It is proposed to amend the said clause (c) by insertion of a proviso so as to provide that for the purposes of calculation of the aggregate participation or investment in the fund, any contribution made by the eligible fund manager during the first three years of operation of the fund, not exceeding twenty-five crore rupees, shall not be taken into account.

Clause (j) of said sub-section provides that the monthly average of the corpus of the fund shall not be less than one hundred crore rupees. First proviso to said clause further provides that where the fund has been established or incorporated in the previous year, the corpus of fund shall not be less than one hundred crore rupees at the end of a period of six months from the last day of the month of its establishment or incorporation, or at the end of such previous year, whichever is later.

It is proposed to amend the first proviso to said clause (j) of said sub-section so as to provide that where the fund has been established or incorporated in the previous year, the fund shall be required to fulfil the condition of maintaining the corpus of one hundred crore rupees within a period of twelve months from the end of the month of its establishment or incorporation.

These amendments will take effect from 1st April, 2020 and will, accordingly apply in relation to the assessment year 2020-2021 and subsequent assessment years.

 
 
 
 
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