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Section 208

Tax on income from units purchased in foreign currency or capital gains arising from their transfer

(1)
The income-tax payable on the total income of an assessee, being overseas financial organisation (herein referred to as Offshore Fund), includes income specified in column B of the Table below, shall be the aggregate the amount specified in column C thereof. Table Sl. Income Income-tax payable No. A B C 1. Income received in respect of units purchased in 10 % foreign currency. 2. Long-term capital gains arising from the transfer 12.5% of units purchased in foreign currency. 3. Total income as reduced by income referred to in Income-tax against serial numbers 1 and 2. chargeable on income.
(2)
Where the gross total income of the Offshore Fund—

(a) consists only of income from units or income by way of long-term capital gains arising from the transfer of units, or both, no deduction shall allowed to the assessee under sections 26 to 61 or section 93(1)(a) and under Chapter VIII;

(b)
includes any income referred to in clause (a),––

(i) the gross total income shall be reduced by such income; and

(ii) the deduction under Chapter VIII shall be allowed as if gross total income so reduced were the gross total income of assessee.

(3)
In this section,––
(a)
“overseas financial organisation” means any institution, association or body, whether incorporated or established under the laws of a country outside India,–– (i) which has entered into an arrangement investment in India with any public sector bank or financial institution or a mutual fund specified Schedule VII (Table: Sl. No. 20 or 21); and (ii) such arrangement is approved by the Securities and Exchange Board of India, established under the Securities and Exchange Board India Act, 1992, for this purpose;
(b)
“public financial institution” shall have the same meaning assigned to it in section 2(72) of the Companies Act, 2013; 5
(c)
“unit” means unit of,–– (i) a mutual fund specified in Schedule VII (Table: Sl. No. (Table: Sl. No. 20 or 21); or (ii) the Unit Trust of India.