Amount of remuneration prescribed under section 9A(3)(m) of the Income-tax Act, 1961

Last updated: 16 January 2021

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The Finance (No 2) Act, 2019, introduced changes to Section 9A of the Income-tax Act, requiring eligible investment funds to pay a prescribed minimum remuneration to eligible fund managers. Rule 10V of the Income-tax Rules was amended to specify this remuneration. However, due to the notification timing, the CBDT has decided to allow compliance for FY 2019-20 and 2020-21 if the remuneration paid is at arm's length, even if lower than prescribed. For FY 2021-22, standard rules apply, with applications for lower remuneration due by 15th February 2021.

F. No. 1370142/2/2021-T PL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (Tax Policy and Legislation Division) New Delhi,15th January , 2021 Amount of remuneration prescribed under section 9A(3)(m) of the Income-tax Act, 1961 Finance (No 2) A

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FAQ :

The Act amended section 9A of the Income-tax Act to require eligible investment funds to pay remuneration to eligible fund managers that is not less than a prescribed amount.

Rule 10V was amended to include sub-rules (12) and (13), with sub-rule (12) specifying the amount of remuneration payable by a fund to a fund manager.

For these financial years, if the remuneration paid to the fund manager is lower than prescribed but at arm's length, it will be considered sufficient compliance with section 9A(3)(m) of the Act.

The concession was introduced to avoid genuine hardship, as the relevant notification (No 29/2020) was issued after the financial year 2019-20 had ended.

For FY 2021-22, remuneration must be in accordance with sub-rule (12) of rule 10V. Applications for approval of lower remuneration must be filed by 15th February 2021.