Section 6 - Amendment of section 10. - Finance Act, 2021

Amendment of section 10. 6. In section 10 of the Income-tax Act, (a) with effect from the 1st day of April, 2022, (i) in clause (4D), (I) after the words attributable to units held by non-resident (not being the permanent establishment of a non-resident in India) , the words or is attributable to the investment division of offshore banking unit, as the case may be, shall be inserted; (II) in the Explanation, (A) after clause (a), the following clause shall be inserted, namely: (aa) investment division of offshore banking unit means an investment division of a banking unit of a non-resident located in an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA and which has commenced its operations on or before the 31st day of March, 2024 ; (B) for clause (c), the following clause shall be substituted, namely: (c) specified fund means, (i) a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate, (I) which has been granted a certificate of registration as a Category III Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992.) or International Financial Services Centres Authority Act, 2019 (50 of 2019.); (II) which is located in any International Financial Services Centre; and (III) of which all the units other than unit held by a sponsor or manager are held by non-residents; or (ii) investment division of an offshore banking unit, which has been (I) granted a certificate of registration as a Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992.) and which has commenced its operations on or before the 31st day of March, 2024; and (II) fulfils such conditions including maintenance of separate accounts for its investment division, as may be prescribed; ; (ii) after clause (4D), the following clauses shall be inserted, namely: (4E) any income accrued or arisen to, or received by a non-resident as a result of transfer of non-deliverable forward contracts entered into with an offshore banking unit of an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, which fulfils such conditions as may be prescribed; (4F) any income of a non-resident by way of royalty or interest, on account of lease of an aircraft in a previous year, paid by a unit of an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, if the unit has commenced its operations on or before the 31st day of March, 2024. Explanation .-For the purposes of this clause, aircraft means an aircraft or a helicopter, or an engine of an aircraft or a helicopter, or any part thereof; ; (b) in clause (5), (i) after the proviso and before the Explanation, the following proviso shall be inserted, namely: Provided further that for the assessment year beginning on the 1st day of April, 2021, the value in lieu of any travel concession or assistance received by, or due to, such individual shall also be exempt under this clause subject to the fulfilment of such conditions (including the condition of incurring such amount of such expenditure within such period), as may be prescribed. ; (ii) the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: Explanation 2.-For the removal of doubts, it is hereby clarified that where an individual claims exemption and the exemption is allowed under the second proviso in connection with the prescribed expenditure, no exemption shall be allowed under this clause in respect of such prescribed expenditure to any other individual. ; (c) in clause (10D), (i) after the third proviso and before Explanation 1, the following provisos shall be inserted, namely: Provided also that nothing contained in this clause shall apply with respect to any unit linked insurance policy, issued on or after the 1st day of February, 2021, if the amount of premium payable for any of the previous year during the term of such policy exceeds two lakh and fifty thousand rupees: Provided also that if the premium is payable, by a person, for more than one unit linked insurance policies, issued on or after the 1st day of February, 2021, the provisions of this clause shall apply only with respect to those unit linked insurance policies, where the aggregate amount of premium does not exceed the amount referred to in fourth proviso in any of the previous year during the term of any of those policies: Provided also that the provisions of the fourth and fifth provisos shall not apply to any sum received on the death of a person: Provided also that if any difficulty arises in giving effect to the provisions of this clause, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty and every guideline issued by the Board under this proviso shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and the assessee. ; (ii) after Explanation 2, the following Explanation shall be inserted, namely: Explanation 3.-For the purposes of this clause, unit linked insurance policy means a life insurance policy which has components of both investment and insurance and is linked to a unit as defined in clause (ee) of regulation 3 of the Insurance Regulatory and Development Authority of India (Unit Linked Insurance Products) Regulations, 2019 issued by the Insurance Regulatory and Development Authority under the Insurance Act, 1938 (4 of 1938.) and the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999.); ; (d) with effect from the 1st day of April, 2022, (i) in clause (11), the following provisos shall be inserted, namely: Provided that the provisions of this clause shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner as may be prescribed: Provided further that if the contribution by such person is in a fund in which there is no contribution by the employer of such person, the provisions of the first proviso shall have the effect as if for the words two lakh and fifty thousand rupees , the words five lakh rupees had been substituted; ; (ii) in clause (12), the following provisos shall be inserted, namely:- Provided that the provisions of this clause shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner as may be prescribed: Provided further that if the contribution by such person is in a fund in which there is no contribution by the employer of such person, the provisions of the first proviso shall have the effect as if for the words two lakh and fifty thousand rupees , the words five lakh rupees had been substituted; ; (iii) in clause (23C), (I) in sub-clause (iiiad), for the words receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed , the words receipts of the person from such university or universities or educational institution or educational institutions do not exceed five crore rupees shall be substituted; (II) in sub-clause (iiiae), (A) for the words receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed; or , the words receipts of the person from such hospital or hospitals or institution or institutions do not exceed five crore rupees. shall be substituted; (B) after sub-clause (iiiae), the following Explanation shall be inserted, namely: Explanation . For the purposes of sub-clauses (iiiad) and (iiiae), it is hereby clarified that if the person has receipts from university or universities or educational institution or institutions as referred to in sub-clause (iiiad), as well as from hospital or hospitals or institution or institutions as referred to in subclause (iiiae), the exemptions under these clauses shall not apply, if the aggregate of annual receipts of the person from such university or universities or educational institution or institutions or hospital or hospitals or institution or institutions, exceed five crore rupees; or ; (III) in the third proviso, (A) the Explanation shall be numbered as Explanation 1 thereof and in Explanation 1 as so numbered, after the words medical institution: occurring at the end, the words, brackets and figures subject to the condition that such voluntary contributions are invested or deposited in one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus shall be inserted; (B) after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: Explanation 2. For the purposes of determining the amount of application under this proviso,- (i) application for charitable or religious purposes from the corpus as referred to in Explanation 1, shall not be treated as application of income for charitable or religious purposes: Provided that the amount not so treated as application or part thereof, shall be treated as application for charitable or religious purposes in the previous year in which the amount, or part thereof, is invested or deposited back, into one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus, from the income of that year and to the extent of such investment or deposit; and (ii) application for charitable or religious purposes, from any loan or borrowing, shall not be treated as application of income for charitable or religious purposes: Provided that the amount not so treated as application or part thereof, shall be treated as application for charitable or religious purposes in the previous year in which the loan or borrowing, or part thereof, is repaid from the income of that year and to the extent of such repayment: ; (IV) in the fourteenth proviso, after the figures and letters 12AA , the words, figures and letters or section 12AB shall be inserted; (V) after the twentieth proviso, the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: Explanation 2. For the purposes of this clause, it is clarified that the calculation of income required to be applied or accumulated during the previous year shall be made without any set off or deduction or allowance of any excess application of any of the year preceding to the previous year; ; (e) in clause (23FE), (A) in sub-clause (iii), (i) in item (c), (I) for the words hundred per cent. , the words not less than fifty per cent. shall be substituted; (II) after the word, brackets and letter item (b) , the words, brackets, letters and figures or item (d) or item (e) or in an Infrastructure Investment Trust referred to in sub-clause (i) of clause (13A) of section 2; or shall be inserted; (ii) after item (c), the following items shall be inserted, namely: (d) a domestic company, set up and registered on or after the 1st day of April, 2021, having minimum seventy-five per cent. investments in one or more of the companies or enterprises or entities referred to in item (b); or (e) 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 Infrastructure Debt Fund-Non-Banking Financial Companies (Reserve Bank) Directions, 2011, issued by the Reserve Bank of India, having minimum ninety per cent. lending to one or more of the companies or enterprises or entities referred to in item (b): ; (B) after the third proviso, the following provisos shall be inserted, namely: Provided also that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) or item (d) or item (e) of the said subclause or in an Infrastructure Investment Trust referred to in item (c) of the said sub-clause, income accrued or arisen or received or attributable to such investment, directly or indirectly, which is exempt under this clause shall be calculated proportionately to that investment made in one or more of the companies or enterprises or entities referred to in item (b) or item (d) or item (e) of the said sub-clause or in the Infrastructure Investment Trust referred to in item (c) of the said sub-clause, in such manner as may be prescribed: Provided also that in case a domestic company referred to in item (d) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income accrued or arisen or received or attributable to such investments, directly or indirectly, which is exempt under this clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, in such manner as may be prescribed: Provided also that in case a non-banking finance company registered as an Infrastructure Finance Company or Infrastructure Debt Fund, referred to in item (e) of sub-clause (iii), has lending of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income accrued or arisen or received or attributable to such lending, directly or indirectly, which is exempt under this clause shall be calculated proportionately to the lending made in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, in such manner as may be prescribed: Provided also that in case a sovereign wealth fund or pension fund has loans or borrowings, directly or indirectly, for the purposes of making investment in India, such fund shall be deemed to be not eligible for exemption under this clause. ; (C) the Explanation shall be numbered as Explanation 1 thereof, and in Explanation 1 as so numbered, (i) in clause (b), (I) after sub-clause (iv), the following proviso shall be inserted, namely: Provided that the provisions of sub-clauses (iii) and (iv) 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; ; (II) in sub-clause (v), for the words undertake any commercial activity whether within or outside India , the words 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 shall be substituted; (ii) in clause (c), (I) in sub-clause (ii), after the word country , the words or if liable to tax, exemption from taxation for all its income has been provided by such foreign country shall be inserted; (II) in sub-clause (iii), for the words prescribed; and , the word prescribed; , shall be substituted; (III) after sub-clause (iii), the following sub-clause shall be inserted, namely: (iiia) 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 day to day operations of the investee; and ; (D) after Explanation 1, the following Explanations shall be inserted, namely: Explanation 2.- For the purposes of this clause, (i) investee means a business trust, or a company, or an enterprise, or an entity, or a Category I or Category II Alternative Investment Fund, or an Infrastructure Investment Trust or a domestic company, or an Infrastructure Finance Company or an Infrastructure Debt Fund referred to in item (e) of sub-clause (iii), in which the sovereign wealth fund or the pension fund, as the case may be, has made the investment, directly or indirectly, under the provisions of this clause; (ii) loan and borrowing means- (a) 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; (b) 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 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, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be. Explanation 3. For the purposes of this clause, the Central Government may prescribe that the method of calculation of fifty per cent. referred to in item (c) or seventy-five per cent. referred to in item (d) or ninety per cent. referred to in item (e), of sub-clause (iii) shall be such as may be prescribed; ; (f) after clause (23FE), the following clause shall be inserted with effect from the 1st day of April, 2022, namely: (23FF) any income of the nature of capital gains, arising or received by a non-resident or a specified fund, which is on account of transfer of share of a company resident in India, by the resultant fund or a specified fund to the extent attributable to units held by non-resident (not being a permanent establishment of a non-resident in India) in such manner as may be prescribed, and such shares were transferred from the original fund, or from its wholly owned special purpose vehicle, to the resultant fund in relocation, and where capital gains on such shares were not chargeable to tax if that relocation had not taken place. Explanation . For the purposes of this clause,- (a) the expressions original fund , relocation and resultant fund shall have the meanings respectively assigned to them in the Explanation to clause (viiac) and clause (viiad) of section 47; (b) the expression specified fund shall have the meaning assigned to it in clause (c) of the Explanation to clause (4D) of section 10; ; (g) after clause (48C), the following clauses shall be inserted with effect from the 1st day of April, 2022, namely:- (48D) any income accruing or arising to an institution established for financing the infrastructure and development, set up under an Act of Parliament and notified by the Central Government for the purposes of this clause, for a period of ten consecutive assessment years beginning from the assessment year relevant to the previous year in which such institution is set up; (48E) any income accruing or arising to a developmental financing institution, licensed by the Reserve Bank of India under an Act of the Parliament referred to in clause (48D) and notified by the Central Government for the purposes of this clause, for a period of five consecutive assessment years beginning from the assessment year relevant to the previous year in which the developmental financing institution is set up: Provided that the Central Government may, by issuing notification under this clause, extend the period of exemption under this clause for a further period, not exceeding five more consecutive assessment years, subject to fulfilment of such conditions as may be specified in the said notification; ; (h) in clause (50), (I) for the figures 2021 , the figures 2020 shall be substituted; (II) for the Explanation, the following Explanations shall be substituted, namely: Explanation 1. For the removal of doubts it is hereby clarified that the income referred to in this clause shall not include and shall be deemed never to have been included any income which is chargeable to tax as royalty or fees for technical services in India under this Act read with the agreement notified by the Central Government under section 90 or section 90A. Explanation 2.-For the purposes of this clause, (i) e-commerce supply or services shall have the meaning assigned to it in clause (cb) of section 164 of the Finance Act, 2016 (28 of 2016.); (ii) specified service shall have the meaning assigned to it in clause (i) of section 164 of the Finance Act, 2016 (28 of 2016.). .