Income Tax Act

Official PDF pages 631–635

SOURCE PDF PAGE 631
Note 1. —For the purposes of Sl. Nos. 1 and 2, the expression “investment fund” shall have
the meaning assigned to it in section 224(10)( a ).
Note 2. —For the purposes of Sl. No. 3, the expression “special purpose vehicle” means an
Indian company in which the business trust holds controlling interest and any specific per -
centage of shareholding or interest, as may be required by the law under which such trust
is granted registration.
Note 3. —For the purposes of Sl. Nos. 4 and 5, the expression “real estate asset” shall have the
same meaning as assigned to it in regulation 2( 1 )( zj ) of the Securities and Exchange Board
of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992).
Note 4. —For the purposes of Sl. No. 6,––
( a )   “venture capital company” means a company which—
( i )   has been granted a certificate of registration, before the 21st May, 2012, as
a Venture Capital Fund and is regulated under the Securities and Exchange
Board of India (Venture Capital Funds) Regulations, 1996 (herein referred
to as the Venture Capital Funds Regulations) made under the Securities
and Exchange Board of India Act, 1992 (15 of 1992); or
( ii )   has been granted a certificate of registration as Venture Capital Fund as a
sub-category of Category I Alternative Investment Fund and is regulated
under the Securities and Exchange Board of India (Alternative Investment
Funds) Regulations, 2012 (herein referred to as the Alternative Investment
Funds Regulations) made under the Securities and Exchange Board of
India Act, 1992 (15 of 1992), and which fulfils the following conditions:—
( A )   it is not listed on a recognised stock exchange;
( B )   it has invested not less than two-thirds of its investible funds in un -
listed equity shares or equity linked instruments of venture capital
undertaking; and
( C )   it has not invested in any venture capital undertaking in which its
director or a substantial shareholder (being a beneficial owner of
equity shares exceeding 10% of its equity share capital) holds, either
individually or collectively, equity shares in excess of 15% of the
paid-up equity share capital of such venture capital undertaking;
( b )   “venture capital fund” means a fund—
( i )   operating under a trust deed registered under the provisions of the   Regis -
tration Act, 1908 (16 of 1908), which—
( A )   has been granted a certificate of registration, before the 21st May,
2012, as a Venture Capital Fund and is regulated under the Venture
Capital Funds Regulations; or
( B )   has been granted a certificate of registration as Venture Capital
Fund as a sub-category of Category I Alternative Investment Fund
under the Alternative Investment Funds Regulations or as referred
to in regulation 18( 2 ) of the International Financial Services Centres
Authority (Fund Management) Regulations, 2022 made under the
International Financial Services Centres Authority Act, 2019 (50 of
2019), and which fulfils the following conditions:—

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( I )   it has invested not less than two-thirds of its investible funds in
unlisted equity shares or equity linked instruments of venture
capital undertaking;
( II )   it has not invested in any venture capital undertaking in which
its trustee or the settler holds, either individually or collectively,
equity shares in excess of 15% of the paid-up equity share
capital of such venture capital undertaking;
( III )   the units, if any, issued by it are not listed in any recognised
stock exchange; and
( IV )   any other condition as may be prescribed; or
( ii )   operating as a venture capital scheme made by the Unit Trust of India;
( c )   “venture capital undertaking” means—
( i )   a venture capital undertaking as defined in regulation 2( n ) of the Securities
and Exchange Board of India (Venture Capital Funds) Regulations, 1996;
or
( ii )   a venture capital undertaking as defined in regulation 2( 1 )( aa ) of the
Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012.
Note 5. —For the purposes of Sl. No. 7,––
( a )   “specified person” means—
( i )   a wholly owned subsidiary of the Abu Dhabi Investment Authority, which—
( A )   is a resident of the United Arab Emirates; and
( B )   makes investment, directly or indirectly, out of the fund owned by
the Government of Abu Dhabi;
( ii )   a sovereign wealth fund, which satisfies the following conditions:—
( A )   it is wholly owned and controlled, directly or indirectly, by the gov -
ernment of a foreign country;
( B )   it is set up and regulated under the law of such foreign country;
( C )   the earnings of the said fund are credited either to the account of the
government of that foreign country or to any other account designated
by that government so that no portion of the earnings enures any
benefit to any private person;
( D )   the asset of the said fund vests in the government of such foreign
country upon dissolution;
( E )   the provisions of items ( C ) and ( D ) shall not apply to any payment
made to creditors or depositors for loan taken or borrowing for the
purposes other than for making investment in India;
( F )   it does not participate in the day-to-day operations of investee but the
monitoring mechanism to protect the investment with the investee
including the right to appoint directors or executive director shall
not be considered as participation in the day to day operations of
the investee; and

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SOURCE PDF PAGE 633
( G )   it is specified by the Central Government, by notification for this
purpose and fulfils the conditions specified in such notification;
( iii )   a pension fund, which—
( A )   is created or established under the law of a foreign country including
the laws made by any of its political constituents, being a province,
State or local body, by whatever name called;
( B )   is not liable to tax in such foreign country or if liable to tax, exemption
from taxation for all its income has been provided by such foreign
country;
( C )   does not participate in the day-to-day operations of investee but the
monitoring mechanism to protect the investment with the investee
including the right to appoint directors or executive director shall
not be considered as participation in day-to-day operations of the
investee;
( D )   is specified by the Central Government, by notification for this pur -
pose and fulfils conditions specified in such notification; and
( E )   satisfies such other conditions as may be prescribed;
( iv )   the Public Investment Fund of the Government of the Kingdom of Saudi
Arabia;
( v )   a wholly owned subsidiary of the Public Investment Fund of the Government
of the Kingdom of Saudi Arabia, which––
( A )   is a resident of Saudi Arabia; and
( B )   makes investment, directly or indirectly, out of the fund owned by
such Government;
( b )   “investee” means a business trust or eligible infrastructure entity or eligible Al -
ternate Investment Fund or eligible domestic company or eligible Non-Banking
Financial Company, in which the sovereign wealth fund or the pension fund has
made the investment directly or indirectly;
( c )   “loan and borrowing” means—
( i )   any loan taken or borrowing by a sovereign wealth fund from or any deposit
or investment made in a sovereign wealth fund by, any person other than
the Government of the country in which the sovereign wealth fund is set
up;
( ii )   any loan taken or borrowing by a pension fund from or any deposit or
investment made in a pension fund by any person, but shall not include––
( A )   the deposit or investment which represents statutory obligations and
defined contributions of one or more funds or plans established for
providing retirement, social security, employment, disability or death
benefits; or
( B )   any similar compensation to the participants or beneficiaries of such
funds or plans, as the case may be;
( d )   “eligible infrastructure entity” means a company or enterprise or an entity carrying
on––

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( i )   the business of developing, or operating and maintaining, or developing,
operating and maintaining an infrastructure facility as defined in section
138; or
( ii )   such other business as the Central Government may, by notification, specify
in this behalf;
( e )   “eligible Alternate Investment Fund” means Category-I or Category-II Alternative
Investment Fund––
( i )   regulated   under   the   Securities   and   Exchange   Board   of   India
(Alternative Investment Funds) Regulations, 2012 made under the Securities
and Exchange Board of India Act, 1992 (15 of 1992);
( ii )   having not less than 50% investment in one or more of the eligible infra -
structure entity or eligible domestic company or eligible Non-Banking
Financial Company or in an eligible InvIT, computed in such manner as
may be prescribed;
( f )   “eligible domestic company” means a domestic company––
( i )   set up and registered on or after the 1st April, 2021; and
( ii )   having minimum 75% investments in one or more of the eligible infrastruc -
ture entities, computed in such manner, as may be prescribed;
( g )   “eligible Non-Banking Financial Company” means––
( i )   a non-banking financial company registered as an Infrastructure Finance
Company as referred to in notification number RBI/2009-10/316 issued by
the Reserve Bank of India or in an Infrastructure Debt Fund, a non-banking
finance company as referred to in the Reserve Bank of India (Non-Banking
Financial Company-Scale Based Regulations) Directions, 2023, issued by
the Reserve Bank of India; and
( ii )   having minimum 90% lending to one or more of eligible infrastructure
entities, computed in such manner, as may be prescribed; and
( h )   “eligible InvIT” means an Infrastructure Investment Trust referred to in section
2( 21 )( a ).
SCHEDULE VI
[ See   section 11]
INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF
CERTAIN ELIGIBLE PERSONS IN INTERNATIONAL FINANCIAL
SERVICES CENTRE OR HAVING INCOME THEREFROM
In computing the total income of a tax year of any eligible person, as mentioned in
column C of the Table below, the income mentioned in column B of the said Table
and the income as mentioned in savings clause 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 the Notes below the said Table.

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SOURCE PDF PAGE 635
TABLE
Sl.
No.
Income not to be
included in total
income
Eligible
persons
Conditions
A   B   C   D
1.   Any income accrued
or arisen to, or re -
ceived, as a result of
transfer   of   capital
asset referred to in
section 70(1)( r ) where
such   transfer   takes
place on a recognised
stock exchange locat -
ed in any Internation -
al Financial Services
Centre.
Any specified
fund.
( a )   Consideration is paid or pay -
able   in   convertible   foreign
exchange;
( b )   Income shall not be included in
the total income to the extent
such income is attributable
to––
( i )   units held by non-resi -
dent (not being the per -
manent establishment of
a non-resident in India);
or
( ii )   the investment division
of offshore banking unit;
and
( c )   The income exempt shall be
computed in such manner as
may be prescribed.
2.   Any income accrued
or arisen to, or re -
ceived, as a result of
transfer of securities
(other than shares in
a company resident
in India).
Any specified
fund.
As specified in clauses ( b ) and ( c ) of
column D against Sl. No. 1.
3.   Any income from se -
curities issued by a
non-resident   where
such securities are not
issued by a permanent
establishment   of   a
non- resident in India.
Any specified
fund.
( a )   Such income otherwise does
not accrue or arise in India;
( b )   As   specified   in   clauses   ( b )
and ( c ) of column D against
Sl. No. 1.
4.   Any income from a
securitisation   trust,
which is chargeable
under the head “Prof -
its and gains of busi -
ness or profession”.
Any specified
fund.
As specified in clauses ( b ) and ( c ) of
column D against Sl. No. 1.
5.   Any income accrued
or arisen to, or re -
ceived as a result of—
Non-resident.   ( a )   Such contract, instrument or
derivative is entered into with
an offshore banking unit