Income Tax: CBDT notifies Computation of Exempt Income from Transfer of GDRs, Rupee Denominated Bonds [Read Notification]

The Central Board of Direct Taxes (CBDT) on Monday inserted Rule 21AI under Income-tax Rules,1962 which provides for the  Computation of exempt income from transfer of GDRs, Rupee Denominated Bonds or Derivatives by Category-III AIFs.

The Board has notified the Income-tax Amendment (22nd Amendment), Rules, 2021 which shall be effective from August 9, 2021.

Rule 21AI says that for the purpose of clause (4D) of section 10, income attributable to units held by non-resident (not being the permanent establishment of a non-resident in India) in a specified fund shall be computed in accordance with the following formula, namely Income exempt under clause (4D) of section 10= A*C1 + B*C2 +D*FI+E*F2.

‘A’ in the formula stands for any income accrued or arisen to or received by a specified fund as a result of the transfer of capital asset referred to in clause (viiab) of section 47, on a recognized stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange.

‘B’ in the formula stands for any income accrued or arisen to, or received by a specified fund as a result of the transfer of securities (other than shares in a company resident in India).

‘C1’ stands for the ratio of the aggregate of daily ‘assets under management of the specified fund held by non-resident unitholders (not being the permanent establishment of a non-resident in India) to the aggregate of daily total ‘assets under management of the specified fund, from the date of acquisition of the capital asset referred to in clause (viiab) of section 47 to the date of transfer of such capital asset.

‘C2’ stands for the ratio of the aggregate of daily ‘assets under management of the specified fund held by non-resident unitholders (not being the permanent establishment of a non-resident in India) to the aggregate of daily total ‘assets under management of the specified fund, from the date of acquisition of the security (other than shares in a company resident in India) to the date of transfer of such security.

‘D’ stands for any income accrued or arisen to or received by a specified fund from securities issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India.

‘E’ stands for any income accrued or arisen to, or received by a specified fund from a securitization trust which is chargeable under the head "profits and gains of business or profession".

‘F1’ for the ratio of the ‘assets under management in the specified fund held by non-resident unitholders (not being the permanent establishment of a non-resident in India) to the total ‘asset under management of the specified fund, as on the date of receipt of such income from securities issued by a non-resident(not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India.

‘F2’ for the ratio of the ‘assets under management in the specified fund held by non-resident unitholders (not being the permanent establishment of a non-resident in India) to the total ‘asset under management of the specified fund, as on the date of receipt of such income from a securitisation trust which is chargeable under the head "profits and gains of business or profession".

The specified fund shall furnish an annual statement of exempt income in Form No. 10 IG electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein.

“The Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems), as the case may be, shall specify the procedure for filing of the Form No. 10 IG and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the statements so furnished under this rule,” the notification said.

To Read the full text of the Notification CLICK HERE

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