Amendment of section 115AD.
30. In section 115AD of the Income-tax Act, with effect from the 1st day of April, 2022,––
(i) in sub-section (1),––
(a) in the opening portion, after the words “a specified fund”, the words “or investment division of an offshore banking unit” shall be inserted;
(b) in clause (b), in sub-clause (i), in item (B), after the words “of specified fund”, the words “or investment division of an offshore banking unit” shall be inserted;
(ii) after sub-section (1A), the following sub-section shall be inserted, namely:––
“(1B) Notwithstanding anything contained in sub-section (1), in case of investment division of an offshore banking unit, the provisions of this section shall apply to the extent of income that is attributable to the investment division of such banking units, referred to in sub-clause (ii) of clause( c) to the Explanation to clause (4D) of section 10, as a Category-III portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities And Exchange Board of India Act, 1992 (15 of 1992), calculated in such manner as may be prescribed.”;.
(iii) in sub-section (2), after the words “the specified fund” at both the places where they occur, the words “or investment division of an offshore banking unit” shall be inserted;
(iv) in the Explanation, after clause (a), the following clause shall be inserted, namely:–––
“(aa) the expression “investment division of offshore banking unit” shall have the meaning assigned to it in clause (aa) of the Explanation to clause (4D) of section 10;”.
Notes on Clauses:
Clause 30 of the Bill seeks to amend section 115AD of the Income-tax Act relating to tax on income of Specified Fund or Foreign Institutional Investors from securities or capital gains arising from their transfer.
It is proposed to amend the said section so as to provide that income of investment division of an offshore banking unit of a non-resident from securities or capital gains arising from their transfer shall also be taxed at the rate of ten per cent. under the provisions of the said section.
It is further proposed to insert a new sub-section (1B) in the said section so as to provide investment division of an offshore banking unit, the provision of this section shall apply to the extent of income that is attributable to the investment division of such banking unit referred to in sub-clause (ii) of clause (c) to the Explanation to clause (4D) of section 10 as a Category-III portfolio investor under the Securities and exchange Board of India (Foreign Portfolio investors) Regulations, 2019 made under the Securities And Exchange Board of India Act, 1992, calculated in the prescribed manner.
It is also proposed to define the expression “investment division of an offshore banking unit”.
These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.
