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The Central Board of Direct Taxes amends the Income-tax Rules, 1962, to revise conditions for eligible investment funds under section 9A. A fund manager is not a connected person of the fund merely by undertaking fund management activity. Remuneration paid to the fund manager in the nature of a fixed charge is excluded from certain profits if specific statutory conditions are met and agreed in writing. The rules also expand criteria for entities incorporated or registered in a notified country or specified territory. Sub-rule (1) takes effect on the date of publication in the Official Gazette. Sub-rules (11) and (12) apply retrospectively from the 15th day of March, 2016.
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MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 21st November, 2016 INCOME-TAX
S.O. 3498(E).—In exercise of the powers conferred by section 295 read with section 9A of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
“(11) For the purposes of clause (a) of sub-section (4) of section 9A, a fund manager shall not be considered to be a connected person of the fund merely for the reason that the fund manager is undertaking fund management activity of the said fund. (12) For the purposes of clause (d) of sub-section (4) of section 9A, any remuneration paid to the fund manager, by the fund, which is in the nature of fixed charge and not dependent on the income or profits derived by the fund from the fund management activity undertaken by the fund manager shall not be included in the profits referred to in the said clause, if the conditions specified in clause (m) of sub-section (3) of section 9A are satisfied and such fixed charge has been agreed by the fund manager in writing at the beginning of the relevant fund management activity .”.
[Notification No. 106 /2016/ F. No. 142/15/2015-TPL] NIRAJ KUMAR, Under Secy. (Tax Policy & Legislation)
Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969(E), dated 26th March, 1962 and was last amended by notification number G.S.R.1073(E), dated 16th November, 2016.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054. ALOK KUMAR Digitally signed by ALOK KUMAR Date: 2016.11.22 14:13:13 +05'30'
