TMI BlogAmendment of section 10.X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been granted a certificate of registration as a Category III Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); (II) which is located in any International Financial Services Centre; and (III) of which all the units other than unit held by a sponsor or manager are held by non-residents; or (ii) investment division of an offshore banking unit, which has been (I) granted a certificate of registration as a Category III Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or which has commenced its operations on or before the 31st day of March, 2024; and . (II) fulfils such conditions including maintenance of separate accounts for its investment division, as may be prescribed; ; (ii) after clause (4D), the following clauses shall be inserted, namely: (4E) any income accrued or arisen to, or received by a non-resident as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um does not exceed the amount referred to in fourth proviso in any of the previous year during the term of any of those policies: Provided also that the provisions of the fourth and fifth provisos shall not apply to any sum received on the death of a person: Provided also that if any difficulty arises in giving effect to the provisions of this clause, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty and every guideline issued by the Board under this proviso shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and the assessee. ; (ii) after Explanation 2, the following Explanation shall be inserted, namely: Explanation 3.- For the purposes of this clause, unit linked insurance policy means a life insurance policy which has components of both investment and insurance and is linked to a unit as defined in clause (ee) of regulation 3 of the Insurance Regulatory and Development Authority of India (Unit Linked Insurance Products) Regulations, 2019 issued by the Insurance Regulatory and Development Authority under the Insurance Act, 1938 (4 of 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity or universities or educational institution or institutions or hospital or hospitals or institution or institutions, exceed five crore rupees; or ; (III) in the third proviso, (A) the Explanation shall be numbered as Explanation 1 thereof and in Explanation 1 as so numbered, after the words medical institution: occurring at the end, the words, brackets and figures subject to the condition that such voluntary contributions are invested or deposited in one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus. shall be inserted; (B) after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: Explanation 2. For the purposes of determining the amount of application under this proviso,- (i) application for charitable or religious purposes from the corpus as referred to in Explanation 1, shall not be treated as application of income for charitable or religious purposes: Provided that the amount not so treated as application or part thereof, shall be treated as application for charitable or religious purposes in the previous year in which the amount, or part thereof, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Reserve Bank of India, having minimum ninety per cent. lending to one or more of the companies or enterprises or entities referred to in item (b): ; (B) after the third proviso, the following provisos shall be inserted, namely: Provided also that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of the said sub-clause, income accrued or arisen or received or attributable to such investment, directly or indirectly, which is exempt under this clause shall be calculated proportionately to that investment made in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause or in the Infrastructure Investment Trust referred to in item (c) of the said sub-clause, in such manner as may be prescribed: Provided also that in case a domestic company referred to in item (d) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II) in sub-clause (iii), for the words prescribed; and , the word prescribed; , shall be substituted; (III) after sub-clause (iii), the following sub-clause shall be inserted, namely: (iiia) it does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of the investee; and ; (D) after Explanation 1, the following Explanations shall be inserted, namely: Explanation 2.- For the purposes of this clause, (i) investee means a business trust, or a company, or an enterprise, or an entity, or a Category I or Category II Alternative Investment Fund, or an Infrastructure Investment Trust or a domestic company, or an Infrastructure Finance Company or an Infrastructure Debt Fund referred to in item (e) of sub-clause (iii), in which the sovereign wealth fund or the pension fund, as the case may be, has made the investment, directly or indirectly, under the provisions of this clause; (ii) loan and borrowing means- (a) any loan taken or borrowing by a soverei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meaning assigned to it in clause (cb) of section 164 of the Finance Act, 2016 (28 of 2016);. (ii) specified service shall have the meaning assigned to it in clause (i) of section 164 of the Finance Act, 2016 (28 of 2016). . - Clause 5 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income. The said section provides that in computing the total income of a previous year of any person, certain categories of income shall not be included in the total income. Clause 4D of said section provides exemption for any income accrued or arisen to, or received by a specified fund as a result of transfer of capital asset referred to in clause (viiab) of section 47, 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 or as a result of transfer of securities (other than shares in a company resident in India) or any income from securities issued by a non-resident ( not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt Explanation 2 so as to clarify that where an individual claims such exemption and the same is allowed under the second proviso in connection with the expenditure provided by rules, no exemption shall be allowed under the said clause in respect of the same expenditure to any other individual. These amendments will take effect from 1st April, 2021. Clause (10D) of the said section provides for the exemption for the sum received under a life insurance policy in respect of which the premium payable for any of the years during the terms of the policy does not exceed ten percent of the actual capital sum assured. It is proposed to insert fourth, fifth, sixth and seventh proviso to the clause. Proposed fourth proviso seeks to provide that the exemption under this clause shall not apply with respect to any unit linked insurance policy, issued on or after the 1st day of February, 2021, if the amount of premium payable for any of the previous year during the term of such policy exceeds two lakh fifty thousand rupees. Proposed fifth proviso seeks to provide that if the premium is payable, by a person, for more than one unit linked insurance policies, issued on or after the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner as may be provided by rules. 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. Sub-clause (iiiad) of clause (23C) of the said section provides for exemption for the income received by any person on behalf of university or educational institution as referred to in that sub-clause. The exemptions under the clause are available subject to the condition that the annual receipts of such university or educational institution do not exceed the annual receipts as may be prescribed. Similarly, sub-clause (iiiae) of the said clause provides for exemption for the income received by any person on behalf of hospital or institution as referred to in that sub-clause. The exemptions under the clause are available subject to the condition that the annual receipts of such hospital or institution do not exceed the annual receipts as may be prescribed. Presently, the amount prescribed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said clause of said section accumulates its income, then payment or credit out of such accumulation, to exempt entities as prescribed in the proviso, shall not be treated as application. It is proposed to amend the said proviso to make a reference of section 12AB which provides for the procedure of registration. It is also proposed to number the Explanation as Explanation 1 thereof the twentieth proviso to the said clause and to insert a new Explanation 2 therein so as to provide that for the computation of income required to be applied or accumulated during the previous year, no set off or deduction or allowance of any excess application, of any of the year preceding the previous year, shall be allowed. 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. Clause (23FE) of the said section provides for the exemption to specified person from the income in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India. Item (c) of sub-clause (iii) of the said clause provides that the specified person may invest in a Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment Trust referred to in item (c) of that sub-clause, in such manner as may be provided by rules. It is also proposed to insert fifth proviso to the said clause so as to provide that in case a domestic company referred to in item (d) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income, accrued or arisen to or received or attributable to such investments, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause (iii), in such manner as may be provided by rules. It is also proposed to insert sixth proviso to the said clause so as to provide that in case a non-banking financial company registered as an Infrastructure Finance Company or Infrastructure Debt Fund referred to in item (e) of sub-clause(iii), has lending of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income, accrued or arisen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government may, by rules, provide the method of calculation of fifty per cent. referred to in item (c) or seventy-five per cent. referred to in item (d) or ninety per cent. referred to in item (e), of sub-clause (iii) of the said clause. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. It is also proposed to insert a new clause (23FF) in the said section so as to exempt any income of the nature of capital gains, arising or received by a non-resident, which is on account of transfer of share of a company resident in India, by the resultant fund and such shares were transferred from the original fund to the resultant fund in relocation, and where capital gains on such shares were not chargeable to tax if that relocation had not taken place. It is also proposed to refer to the definitions of the expressions investment division of offshore banking unit , original fund , relocation and resultant fund as defined in the Explantion to clause (viiac) and clause (viiad) of section 47. These amendments will take effect from 1st April, 2022 and will, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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