Income Tax Act

Official PDF pages 591–595

SOURCE PDF PAGE 591
at the end of twelve months from the last day of the month of its
establishment or incorporation; and
( ii )   this clause shall not apply to a fund which has been wound up in
the tax year;
( k )   the fund shall not carry on or control and manage, directly or indirectly,
any business in India;
( l )   the fund is neither engaged in any activity which constitutes a business
connection in India nor has any person acting on its behalf whose activ -
ities constitute a business connection in India other than the activities
undertaken by the eligible fund manager on its behalf;
( m )   the remuneration paid by the fund to an eligible fund manager in respect
of fund management activity undertaken by him on its behalf is not less
than the amount calculated in such manner, as may be prescribed.
(2) The conditions specified in paragraph (1)( e ), ( f ) and ( g ) shall not apply, in case of—
( a )   an investment fund set up by the Government or the Central Bank of a
foreign State or a sovereign fund; or
( b )   such other fund as the Central Government may, by notification, specify
in this behalf, subject to conditions, if any.
(3) The eligible fund manager, referred to in section 9(12), in respect of an eligible
investment fund, means any person who is engaged in the activity of fund manage -
ment and fulfils the following conditions:––
( a )   the person is not an employee of the eligible investment fund or a con -
nected person of the fund;
( b )   the person is registered as a fund manager or an investment advisor in
accordance with the regulations as specified;
( c )   the person is acting in the ordinary course of his business as a fund
manager;
( d )   the person along with his connected persons shall not be entitled, directly
or indirectly, to more than 20% of the profits accruing or arising to the
eligible investment fund from the transactions carried out by the fund
through the fund manager.
(4) Every eligible investment fund shall, in respect of its activities in a tax year, fur -
nish within ninety days from the end of the tax year, a statement in the prescribed
form to the prescribed income-tax authority containing information relating to the
fulfilment of the conditions specified in this Schedule, and also provide such other
relevant information or documents, as may be prescribed.
(5) The provisions of this Schedule shall apply as per such guidelines and in such
manner as the Board may prescribe in this behalf.
(6) The Central Government may, by notification, specify that any one or more of
the conditions specified in sub-paragraph (1) or (3) shall not apply or shall apply
with such modifications, as specified in case of an eligible investment fund and its
eligible fund manager, if––

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SOURCE PDF PAGE 592
( i )   the eligible fund manager is located in an International Financial Services
Centre; and
( ii )   has commenced its operations on or before the 31st March, 2030.
2.   In this Schedule,—
( a )   “associate” means an entity in which a director or a trustee or a partner
or a member or a fund manager of the investment fund, or a director or
a trustee or a partner or a member of the fund manager of such fund,
holds, either individually or collectively, share or interest, being more
than 15% of its share capital or interest, as the case may be;
( b )   “connected person” shall have the meaning assigned to it in section
184(5);
( c )   “corpus” means the total amount of funds raised for the purpose of in -
vestment by the eligible investment fund as on a particular date;
( d )   “entity” means any entity in which an eligible investment fund makes an
investment; and
( e )   “specified regulations” means the Securities and Exchange Board of India
(Portfolio Managers) Regulations, 2020 or the Securities and Exchange
Board of India (Investment Advisers) Regulations, 2013, or such other
regulations made under the Securities and Exchange Board of India Act,
1992 (15 of 1992), which may be notified in this regard.
SCHEDULE II
[ See   section 11]
INCOME NOT TO BE INCLUDED IN TOTAL INCOME
In computing the total income of a person for a tax year, the income mentioned
in column B of the Table below shall not be included, subject to fulfilment of the
conditions mentioned in column C of the said Table, and the expressions used in
columns B and C of the said Table, shall have the meaning respectively assigned to
them in the Notes below the said Table:
TABLE
Sl.
No.
Income not to be
included in total
income
Conditions
A   B   C
1.   Agricultural income.   Nil .
2.   Any sum received un -
der   a   life   insurance
policy, including the
sum allocated by way
of bonus on such policy.
( a )   The insurance policies, issued during the
period mentioned in column B of the table
below, except where such sum is received on
the death of a person, under a life Insurance
policy issued by, shall fulfil the conditions
mentioned in column C thereof:

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SOURCE PDF PAGE 593
Sl.
No.
Income not to be
included in total
income
Conditions
A   B   C
Sl.
No.
Period of issue of
insurance policy
Conditions
A   B   C
1.   1st April, 2003 to
31st March, 2012.
Premium to sum assured
ratio is ≤ 20%.
2.   1st April, 2012 to
31st March, 2013.
Premium to sum assured
ratio is ≤ 10%.
3.   1st   April,   2013
to 31st January,
2021.
Premium to sum assured
ratio is ≤ 15% for special
policy;   and   ≤   10%   for
other policies.
4.   1st February, 2021
to   31st   March,
2023.
Unit   linked   insurance
policy:—
( A )   premium to sum as -
sured ratio is ≤ 15%
for special policy;
and ≤ 10% for other
policies; and
( B )   aggregate   of   pre -
mium for all such
policies (in any of
the tax years during
the term of all of
such policies) is ≤
`   2,50,000.
Other than unit linked
insurance policy:—
Premium to sum assured
ratio is ≤ 15% for special
policy;   and   ≤   10%   for
other policies.
5.   On or after the 1st
April, 2023.
Unit   linked   insurance
policy:—
( a )   premium to sum
assured ratio is ≤
15%   for   special
policy; and ≤ 10%
for other policies;
and

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SOURCE PDF PAGE 594
Sl.
No.
Income not to be
included in total
income
Conditions
A   B   C
Sl.
No.
Period of issue of
insurance policy
Conditions
A   B   C
( b )   aggregate of pre -
mium for all such
policies (in any of
the tax years dur -
ing the term of all
of such policies)
<   `   2,50,000.
Other than Unit linked
insurance policy:—
( i )   premium to sum
assured ratio is   <
15%   for   special
policy; and   <   10%
for other policies;
and
( ii )   aggregate of pre -
mium for all such
policies (in any of
the tax years dur -
ing the term of all
of such policies) is
<   `   5,00,000;
( b )   the conditions of aggregate premium of
`   2,50,000 and   `   5,00,000 mentioned in
clause ( a ) shall not apply to any sum received
under a life Insurance policy issued on or
after the 1st April, 2025, by the International
Financial Services Centre Insurance Office;
( c )   the following sums shall not be eligible for
exclusion from total income:––
( i )   any   sum   received   under   section   127(4);
and
( ii )   any sum received under a Keyman
insurance policy.

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SOURCE PDF PAGE 595
Sl.
No.
Income not to be
included in total
income
Conditions
A   B   C
Note.— For removal of difficulties, the Board may issue
guidelines with the previous approval of the Central
Government, which shall be binding on the income-tax
authorities and the assessee and every guideline issued
by the Board under this clause shall be laid before each
House of Parliament.
3.   Any   payment   from
a   provident   fund   to
which   the   Provident
Funds Act, 1925 (19 of
1925) applies, or from
any   other   provident
fund   set   up   by   the
Central   Government
and notified by it in
this behalf.
( a )   The income by way of interest accrued during
the tax year shall not be eligible for exclusion
from total income where,––
( i )   it is attributable to the contribution
(including aggregate thereof) made by
that person on or after the 1st April,
2021;
( ii )   such contribution exceeds––
( A )   `   5,00,000 in a tax year in such
fund where no contribution is
made by the employer of such
person;
( B )   `   2,50,000 in other cases; and
( b )   the amount of income not to be excluded
from total income as referred to in clause ( a )
shall be computed in such manner, as may
be prescribed.
4.   The accumulated bal -
ance due and becoming
payable to an employee
participating in a rec -
ognised provident fund
to the extent provided
in paragraph 8 of Part
A of the Schedule XI.
( a )   The income by way of interest accrued during
the tax year shall not be eligible for exclusion
from total income where,––
( i )   it is attributable to contribution (in -
cluding aggregate thereof) made by that
person on or after the 1st April, 2021;
and
( ii )   such contribution exceeds––
( A )   `   5,00,000 in a financial year in
such fund where no contribution
is made by the employer of such
person; or
( B )   `   2,50,000 in other cases; and
( b )   the amount of income not to be excluded
from total income as referred to in clause ( a )
shall be computed in such manner as may
be prescribed.