The Central Board of Direct Taxes (CBDT) has notified the provision for Computation of exempt income of specified funds, attributable to the Investment division of an offshore banking unit.
The Board in exercise of the powers conferred by clause (4D) of section 10 and sub-section (1B) of section 115AD, read with section 295 of the Income-tax Act, 1961 has notified Income Tax (1st Amendment) , Rules, 2022 which will be effective from 1st April, 2022.
Rule 21AJA has been inserted which relates to the Computation of exempt income of specified funds, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Act.
“The eligible investment division shall furnish an annual statement of exempt income in Form No. 10-IK electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein,” the notification read.
An investment division of an offshore banking unit shall fulfill the various conditions, namely it shall maintain separate accounts for the registered investment division reflecting the true and fair accounts of all transactions relating to the investment division and which shall ensure that direct and indirect expenses relating to the incomes referred to in sub-rule (1) and other incomes are properly recorded, accounted for, and apportioned to these activities; it shall get the accounts, referred to in clause (a), audited by an accountant before the specified date and such accountant shall furnish by that date the report of such audit in Form No. 10-IL electronically under digital signature, which is duly verified in the manner indicated therein; it shall maintain proper documentation in respect of inbound remittance for buying and selling the investments; and the use of inward remittance made to India; it shall maintain bank statement of all accounts of the registered investment division; it shall maintain contract notes relating to purchase and sale of securities by the registered investment division; andit shall maintain a statement of securities issued by the custodian.
Rule 21AJAA has been inserted for the determination of income of a specified fund attributable to the investment division of an offshore banking unit under sub-section (1B) of section 115AD of the Act.
The Board has notified two Forms namely FORM NO. 10-IK and FORM NO. 10-IL which pertains to Annual Statement of Exempt Income under sub-rule (2) of rule 21AJA and taxable income under sub-rule (2) of rule 21AJAA, and Verification by an Accountant under sub-rule (3) of rule 21AJA respectively.
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