The Central Board of Direct Taxes (CBDT) notified the Income Tax Exemption for School Employees Retirement System of Ohio under section 10(23FE) on eligible investments made in India.
However, the CBDT has notified various conditions to be fulfilled by the School Employees Retirement System of Ohio.
To begin with, the assessee shall file return of income, for all the relevant previous years falling within the period beginning from the date in which the said investment has been made and ending on the date on which such investment is liquidated, on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act.
Further, the assessee shall furnish along with such return a certificate in Form No. 10BBC in respect of compliance to the provisions of clause (23FE) of section 10 of the Act, during the financial year, from an accountant as defined in the Explanation below sub-section (2) of section 288 of the Act, as per the provisions of clause (vi) of rule 2DB of the Income –tax Rules, 1962.
In addition, the assessee shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB, as per the provisions of clause (v) of rule 2DB of the Income-tax Rules, 1962.
The assessee shall maintain a segmented account of income and expenditure in respect of such investment which qualifies for exemption under clause (23FE) of section 10 of the Act.
Furthermore, he assessee shall continue to be regulated under the law of the State of Ohio, United States of America.
The assessee shall be responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be.
Not more than ten per cent. of the total value of the assets administered or invested by the assesse are allowed for the purpose other than the purpose listed at clause (vi) provided such assets are wholly owned directly or indirectly by the State of Ohio, United States of America and such assets vest in the State of Ohio, United States of America upon dissolution.
The earnings and assets of the assessee should be used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (vi) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person; barring any payment made to creditors or depositors for loan or borrowing [as defined in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act] taken for the purposes other than for making investment in India.
In conclusion, the earning from assets referred to in clause (vii) may be used for purpose other than the purpose listed as in clause (viii) provided that the said earnings are credited either to the account of Government of State of Ohio, United States of America or any other account designated by such Government so that no portion of the earnings inures any benefit to any private person.
The Board has clarified that the violation of any of the conditions specified under Section 10(23FE) will render the assessee ineligible for the tax exemption.
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