Quick Summary
The CBDT (Central Board of Direct Taxes) has amended the notification No. 16/2020 dated 05-03-2020 to enhance the scope of section 47(viiab) exemption. Section 47(viiab) of the Income Tax Act, 1961 provides for an exemption from capital gains tax on transfer of capital assets by a non-resident on a recognized stock exchange located in any International Financial Services Centre (IFSC).
The amendment has included the following units under the scope of exemption
- Units of investment trust launched under IFSC
- Units of exchange traded fund launched under IFSC
- Units of scheme framed under International Financial Services Centres Authority (Fund Management) Regulations, 2022
The exemption is available only if the following conditions are met
- The transfer is made on a recognized stock exchange located in any IFSC.
- The consideration for the transfer is paid or payable in foreign currency.
- The capital asset is one of the assets specified in section 47(viiab).
The amendment is effective from the date of its publication in the Official Gazette.
Click here to view the official copy of the notification
FAQ :
Section 47(viiab) of the Income Tax Act, 1961, provides an exemption from capital gains tax for non-residents when they transfer capital assets on a recognised stock exchange located in an International Financial Services Centre (IFSC).
The CBDT has amended its notification to enhance the scope of Section 47(viiab) exemption, specifically including units of investment trusts and exchange-traded funds (ETFs) launched under an IFSC.
The exemption now covers units of investment trusts launched under IFSC, units of exchange-traded funds launched under IFSC, and units of schemes framed under the International Financial Services Centres Authority (Fund Management) Regulations, 2022.
The conditions are that the transfer must be made on a recognised stock exchange in an IFSC, the consideration must be paid or payable in foreign currency, and the capital asset must be one specified in Section 47(viiab).
The amendment is effective from the date of its publication in the Official Gazette.
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