On December 27, 2021, the Central Board of Direct taxes issued Income-tax (34th Amendment) Rules, 2021 to amend the Income–tax Rules,1962,
Key features:
- In the Income–tax Rules, 1962, the following rule shall be inserted:
“2DD. Computation of exempt income of specified fund for the purposes of clause (23FF) of section 10:
(1) For the purpose of clause (23FF) of section 10, income of the nature of capital gains, arising or received by a specified fund, which is attributable to units held by non–resident (not being a permanent establishment of a non–resident in India) in such specified fund shall be computed as under:–
(i) where the specified fund files Form No. 10-II in accordance with sub-rule (2), the Income exempt under clause (23FF) of section 10= [A*B/C], where,-
A = income of the nature of capital gains, arising or received by a specified fund, which is on account of transfer of shares of a company resident in India, by the specified fund and where such shares were received by the specified fund, being resultant fund, in relocation from the original fund, or from its wholly owned special purpose vehicle, and where such capital gains would not be chargeable to tax if the relocation had not taken place;
B = aggregate of daily „assets under management‟ of the specified fund which are held by non–resident unit holders (not being the permanent establishment of a non–resident in India), from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share.
C = aggregate of daily total „assets under management‟ of the specified fund, from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share.
(ii) where no Form No.10-II is filed by the specified fund, the exempt income shall be NIL
(2) The specified fund shall furnish an annual statement of exempt income in Form No.10-II electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein.
(3) It shall get the annual statement, referred to in sub-rule (2), certified by an accountant before the specified date and such accountant shall furnish by that date the certificate in Form No. 10-IJ electronically under digital signature, which is duly verified in the manner indicated therein.
(4) The Principal Director General of Income–tax (Systems) or the Director General of Income tax (Systems), as the case may be, shall specify the procedure for filing of the Form Nos. 10–II and 10–IJ and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the statements so furnished under this rule.
- In the principal rules, in Appendix II, the Form No. 10–II dealing with Statement of exempt income under clause (23FF) of section 10 of the Income-tax Act, 1961 shall be inserted.