Income Tax Act

Official PDF pages 626–630

SOURCE PDF PAGE 626
( c )   “subsidiary company” or “subsidiary”, in relation to a holding company, means
a company in which the holding company exercises or controls more than one-
half of the total share capital either at its own or together with one or more of
its subsidiary companies.
Note 2:   For the purposes of Sl. No. 10,––
“European Economic Community” means the European Economic Community
established by the Treaty of Rome of 25th March, 1957.
40 [ Note 3:   For the purposes of Sl. No. 13C,––
( a )   “data centre” means a dedicated secure space within a building or centralised loca -
tion where computing and networking equipment is concentrated for the purpose
of collecting, storing, processing, distributing or allowing access to large amounts
of data;
( b )   “data centre services” means the services provided by a data centre through the use
of physical infrastructure including land, buildings, mechanical electrical power
equipments, cooling system, security and information technology infrastructure
including servers, computers, storage systems, operating systems, security solutions,
network and associated software platforms, networking and other equipment, human
resource in India;
( c )   “specified data centre” means a data centre which is––
( i )   set up under an approved scheme and is notified in this behalf by the Central
Government in the Ministry of Electronics and Information Technology; and
( ii )   owned and operated by an Indian company. ]
SCHEDULE V
[ See   section 11]
INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF CERTAIN
ELIGIBLE PERSONS INCLUDING INVESTMENT FUNDS,
BUSINESS TRUSTS AND THEIR UNIT HOLDERS
In computing the total income of a tax year of any eligible person mentioned in
column C of the Table below, the income mentioned in column B of the said Table
shall not be included, subject to the conditions mentioned in column D of the said
Table, and the expressions used in columns B to D of the said Table shall have the
meanings respectively assigned to them in Notes below the said Table:
TABLE
Sl.
No.
Income not to be
included in total
income
Eligible persons   Conditions
A   B   C   D
1.   Any   income   other
than   the   income
chargeable   under
the head “Profits and
gains of business or
profession”.
An   investment
fund.
Nil.
40.   Inserted by the Finance Act, 2026, w.e.f.   1-4-2026 .

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SOURCE PDF PAGE 627
Sl.
No.
Income not to be
included in total
income
Eligible persons   Conditions
A   B   C   D
2.   Any income referred
to   in   section   224,
accruing or arising
to, or received being
that proportion of
income which is of
the same nature as
income chargeable
u n d e r   t h e   h e a d
“Profits   and   gains
o f   b u s i n e s s   o r
profession”.
A unit holder of
an   investment
fund.
Nil.
3.   Any income by way
of—
( a )   i n t e r e s t   r e   -
ceived   or   re -
ceivable from
a special pur -
pose vehicle; or
( b )   dividend   re -
ceived   or   re -
ceivable from
a special pur -
pose vehicle.
A business trust.   Nil.
4.   Any income by way
of renting or leasing
or letting out any real
estate asset owned
directly   by   such
business trust.
A business trust,
b e i n g   a   r e a l
estate   invest -
ment trust.
Nil.
5.   A n y   d i s t r i b u t e d
income referred to
in section 223.
Any unit holder
of   a   business
trust.
Exemption shall not be allowed
on that proportion of the income
which is of the same nature as––
( a )   interest received or receivable
from a special purpose vehi -
cle by the business trust; or
( b )   dividend received or receiv -
able from a special purpose
vehicle by the business trust
(in a case where the special
purpose vehicle has exercised
the option under section 200);
or

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SOURCE PDF PAGE 628
Sl.
No.
Income not to be
included in total
income
Eligible persons   Conditions
A   B   C   D
( c )   income of a business trust,
being a real estate investment
trust, by way of renting or
leasing or letting out any real
estate asset owned directly by
such business trust.
6.   Any   income   from
investment in a ven -
ture capital under -
taking.
Venture capital
c o m p a n y   o r
venture capital
fund other than
an   investment
fund specified in
section 224(10)
( a ).
Nil.
7.   Any income of the
nature of––
( a )   dividend;
( b )   interest;
( c )   any   sum   re -
ferred to in sec -
tion   92(2)( k );
or
( d )   long-term cap -
ital gains (whe-
ther or not such
capital   gains
are deemed as
short-term   cap -
ital gains under
section 76),
arising   from   an
investment made by
a specified person in
India, whether in the
form of debt or share
capital or unit.
A specified per -
son.
( a )   Such investment—
( i )   is made on or after the
1st April, 2020 but on or
before the 31st March,
2030;
( ii )   is held for at least three
years; and
( iii )   is in,—
( A )   a business trust
being an eligible
InvIT;
( B )   an eligible infra -
structure entity;
( C )   an eligible Alter -
nate Investment
Fund;
( D )   an eligible domes -
tic company; or
( E )   an eligible Non-
banking   Finan -
cial Company;
( b )   if any difficulty arises in in -
terpreting or implementing
the provisions, the Board may
issue guidelines;
( c )   such guidelines shall be––
( i )   issued with the previous
approval of the Central
Government;

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SOURCE PDF PAGE 629
Sl.
No.
Income not to be
included in total
income
Eligible persons   Conditions
A   B   C   D
( ii )   laid before each House
of Parliament; and
( iii )   binding on the Income-
tax Authority and the
specified person;
( d )   where any income has not
been included in the total in -
come of the specified person,
and subsequently during any
tax year the specified person
fails to satisfy any of these
conditions so that the said
income would not have been
eligible for such non-inclu -
sion, such income shall be
chargeable to income-tax as
the income of the specified
person of that tax year;
( e )   where an eligible Alternate
Investment Fund has invest -
ment of less than 100% in
one or more of eligible in -
frastructure entity or eligible
domestic company or eligible
Non-Banking Financial Com -
pany or in an eligible InvIT,
income accrued or arisen or
received or attributable to
such investment, directly or
indirectly, which is exempt
herein shall be calculated pro -
portionately to that invest -
ment made in one or more
of the eligible infrastructure
entity or eligible domestic
company or eligible Non-
Banking Financial Company
or in an eligible InvIT, in such
manner as may be prescribed;
( f )   where an eligible domestic
company has investment of
less than 100% in one or more

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SOURCE PDF PAGE 630
Sl.
No.
Income not to be
included in total
income
Eligible persons   Conditions
A   B   C   D
of the eligible infrastructure
entity, income accrued or
arisen or received or attrib -
utable to such investments,
directly or indirectly, which
is exempt herein shall be
calculated proportionately to
the investment made in one
or more of the eligible infra -
structure entity, in such man -
ner, as may be prescribed;
( g )   where an eligible Non-Bank -
ing Financial Company has
lending of less than 100% in
one or more of the eligible
infrastructure entity, income
accrued or arisen or received
or attributable to such lend -
ing, directly or indirectly,
which is exempt herein shall
be   calculated   proportion -
ately to the lending made in
eligible infrastructure entity,
in such manner, as may be
prescribed;
( h )   in case a sovereign wealth
fund or pension fund has
loans or borrowings, directly
or indirectly, for the purpos -
es of making investment in
India, such fund shall be
deemed to be not eligible for
exclusion from total income.
8.   Any   income   fall -
ing   under   section
10( 23F ) and ( 23FA )
of   the   Income-tax
Act,   1961   (43   of
1961), subject to the
conditions as speci -
fied therein.