Quick Summary
Central Board of Direct Taxes (CBDT) issued the Income-tax (Twelfth Amendment) Rules, 2023 on July 17, 2023. The amendment aims to provide exemptions and regulations regarding certain income and financial instruments for non-residents.
The key changes introduced by the amendment are as follows
- Exemption for non-residents from tax on income from non-deliverable forward contracts, offshore derivative instruments, and over-the-counter derivatives. The exemption is subject to the condition that the contract, instrument, or derivative is entered into by the non-resident with an offshore banking unit of an International Financial Services Centre (IFSC) that holds a valid certificate of registration granted by the International Financial Services Centres Authority (IFSCA).
- Regulation of specified funds in IFSC. The amendment defines the term "specified fund" and lays down the conditions that a fund must meet in order to be considered a specified fund. Specified funds are exempt from tax on income derived from investments made in them.
- Substitution of Form No. 10CCF. The amendment substitutes Form No. 10CCF in Appendix II of the IT Rules with a new form. The new form has been simplified and includes additional information that is required for the purposes of taxation of non-residents.
The amendments are effective from the date of their publication in the Official Gazette.
Here are some of the key benefits of the amendment for non-residents
- They will be exempt from tax on income from non-deliverable forward contracts, offshore derivative instruments, and over-the-counter derivatives.
- They will be able to invest in specified funds in IFSC without having to pay tax on the income derived from their investments.
- The new form for Form No. 10CCF has been simplified and includes additional information that is required for the purposes of taxation of non-residents.
Overall, the amendment is a positive step for non-residents who are looking to invest in India. It provides them with a number of tax benefits and makes it easier for them to comply with the tax laws.
Official copy of the notification has been enclosed below
FAQ :
The amendment aims to provide tax exemptions and regulations for certain income and financial instruments for non-residents investing in India, particularly within IFSCs.
Non-residents are now exempt from tax on income derived from non-deliverable forward contracts, offshore derivative instruments, and over-the-counter derivatives, provided they are entered into with an IFSC offshore banking unit.
The amendment defines 'specified funds' and outlines the conditions a fund must meet to qualify. Income derived from investments in these specified funds is exempt from tax for non-residents.
Yes, Form No. 10CCF has been substituted with a new, simplified version that includes additional information required for the taxation of non-residents.
The amendments are effective from the date of their publication in the Official Gazette.
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