Rule 8B - Guidelines for notification of zero coupon bond - Income-tax Rules, 1962

Guidelines for notification of zero coupon bond. 8B. (1) An application by an infrastructure capital company or 1 [ infrastructure capital fund or infrastructure debt fund ] or a public sector company for notification under clause (48) of section 2 of any zero coupon bond proposed to be issued by it shall be made in Form No. 5B at least three months before the date of issue of such bond: 2 [ Provided that an application shall not be made for notification of a bond which is to be issued beyond a period of two financial years following the financial year in which such application is made: Provided further that an application made in Form No. 5B shall be disposed of within a period of six months from the date of receipt of such application. ] (2) Every application, under sub-rule (1), shall be accompanied by the following documents, namely: 3 [ (i) where the application is made by any infrastructure capital company or infrastructure debt fund or a public sector company, being a Government company defined under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013), a copy of certificate of incorporation under the Companies Act, 2013 (18 of 2013). ] (ii) where the application is made by any infrastructure capital fund, a copy of the trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908); (iii) where the application is made by a public sector company, being any corporation, established by or under any Central or State or Provincial Act, a copy of the relevant Act. (3) The Central Government, while specifying a zero coupon bond by notification in the Official Gazette shall satisfy itself that the following conditions are fulfilled, namely: (i) the period of life of the bond is not less than ten years and not more than twenty years; (ii) the infrastructure capital company or 4 [ infrastructure capital fund or infrastructure debt fund ] or public sector company proposing to issue a zero coupon bond has an investment grade rating from at least two credit rating agencies registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); (iii) necessary arrangement has been made by the infrastructure capital company or 4 [ infrastructure capital fund or infrastructure debt fund ] or public sector company for listing the zero coupon bond in a recognised stock exchange in India; (iv) where the application is made by the infrastructural capital company or 4 [ infrastructure capital fund or infrastructure debt fund ] , such company or fund shall furnish along with the application an undertaking that the money realised on issue of the zero coupon bond shall be invested by it in the following manner, namely: (i) twenty-five per cent or more of such realisation before the end of the financial year immediately following the financial year in which the bond is issued; (ii) the balance of such realisation within a period of four financial years immediately following the financial year in which the bond is issued; (v) where the application is made by a public sector company, such company shall furnish along with the application an undertaking that the money realised on issue of the zero coupon bond shall be invested or utilised by it in the following manner, namely: (i) fifteen per cent or more of such realisation before the end of the financial year immediately following the financial year in which the bond is issued; (ii) the balance of such realisation within a period of six financial years immediately following the financial year, in which the bond is issued. 5 [ (vi) where the application is made by an infrastructure debt fund, such fund shall along with the application, submit an undertaking that a sinking fund shall be maintained for the interest which will accrue on all the zero coupon bonds subscribed and such interest shall be invested in Government security as defined under clause (f) of section 2 of the Government Securities Act, 2006 (38 of 2006). ] (4) The Central Government, after having satisfied itself about fulfilling of the conditions referred to in sub-rule (1), sub-rule (2) and sub-rule (3) shall specify the bond, by notification in the Official Gazette, giving therein, inter alia, the following particulars, namely: (a) name of the bond; (b) period of life of the bond; (c) the time schedule of the issue of the bond; (d) the amount to be paid on maturity or redemption of the bond; (e) the discount; (f) the number of bonds to be issued. (5) The Central Government may, if the applicant fails to fulfil the conditions referred to in sub-rule (1) or sub-rule (2) or sub-rule (3), reject the application for notification after giving an opportunity of being heard to the infrastructure capital company or 6 [ infrastructure capital fund or infrastructure debt fund ] or public sector company, as the case may be. 7 [ (6) Every infrastructure capital company or infrastructure capital fund or infrastructure debt fund or public sector company shall submit within two months from the end of each financial year referred to in sub-clause (i) or sub-clause (ii) of clause (iv) of sub-rule (3), or, as the case may be, in sub-clause (i) or sub-clause (ii) of clause (v) of sub-rule (3), a certificate from an accountant as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year in Form No. 5BA. ] (7) The Central Government shall have the power to withdraw the notification if the applicant fails to fulfil any of the conditions referred to in sub-rule (3) or sub-rule (6). 9 [ (8) The application in Form No. 5B referred to in sub-rule (1) and the certificate of accountant in Form 5BA referred to in sub-rule (6) shall be furnished electronically either under digital signature or electronic verification code. (9) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing of Form No. 5B and Form No. 5BA. Explanation.- For the purposes of this rule, the expressions,- (i) discount and period of life of the bond shall have the same meanings respectively assigned to them in clause (i) and clause (ii) of the Explanation to clause (iiia) of sub-section (1) of section 36; (ii) electronic verification code means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems); (iii) infrastructure debt fund shall mean the infrastructure debt fund notified by the Central Government in the Official Gazette under clause (47) of section 10 of the Act. ] 8 [ **** ] ************* NOTES:- 1. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, infrastructure capital fund 2. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, Provided that an application shall not be made for notification of a bond to be issued after two financial years following the financial year in which the application is made. 3. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, (i) where the application is made by any infrastructural capital company or a public sector company, being a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), a copy of certificate of incorporation under the Companies Act, 1956 (1 of 1956); 4. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, infrastructure capital fund 5. Inserted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 6. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, infrastructure capital fund 7. Substituted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, (6) Every infrastructure capital company or infrastructure capital fund or public sector company shall submit within two months from the end of each financial year referred to in sub-clause (i) or sub-clause (ii) of clause (iv) of sub-rule (3), or as the case may be, in sub-clause (i) or sub-clause (ii) of clause (v) of sub-rule (3), a certificate from an accountant as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year. 8. Omitted vide NOTIFICATION NO. 28/2022 dated 06-04-2022 before it was read as, Explanation.- For the purpose of this rule, the expressions discount and period of life of the bond shall have the same meanings respectively assigned to them in clause (i) and clause (ii) of the Explanation to clause (iiia) of sub-section (1) of section 36. 9. Inserted vide NOTIFICATION NO. 28/2022 dated 06-04-2022