## Policy Analysis Report: S.O. 6103(E) - Income Tax Exemption Specification for Ontario Inc.
**1. Executive Summary:**
This report analyzes Notification S.O. 6103(E), issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes on December 28, 2022. This is a new policy. It specifies 1000242244 Ontario Inc. as a "specified person" for the purpose of income tax exemption under clause 23FE of section 10 of the Income-tax Act, 1961, concerning eligible investments made in India. The notification outlines conditions that Ontario Inc. must fulfill to qualify for this exemption, including requirements for filing returns, furnishing certificates, maintaining segmented accounts, and adhering to specific investment criteria. Key findings indicate a focused effort to attract foreign pension fund investment while ensuring compliance and preventing misuse of the tax exemption.
**2. Introduction:**
This report aims to provide a comprehensive overview and analysis of Notification S.O. 6103(E), based solely on the information contained within the provided text. The report will detail the policy's objectives, key provisions, affected stakeholders, inferred implementation aspects, and expected outcomes.
**3. Policy Overview:**
* **Core Objective(s):** The core objective of this policy is to designate 1000242244 Ontario Inc. as a "specified person" for the purpose of availing income tax exemptions on eligible investments made in India under clause 23FE of section 10 of the Income-tax Act, 1961. The objective also includes establishing stringent conditions to ensure the legitimate and regulated use of this exemption.
**4. Background and Rationale:**
* **Likely Problem/Issue Addressed:** The policy likely addresses the government's strategy to attract foreign investment into India, specifically from pension funds. Clause 23FE of Section 10 already exists, and this notification allows a specific entity to take advantage of it. By providing tax exemptions under specific conditions, the government aims to incentivize investment from entities like Ontario Inc., while simultaneously implementing safeguards against potential misuse of the exemption. The policy is a targeted attempt to boost foreign investment through a specific tax incentive framework.
**5. Key Provisions:**
The policy outlines the following key provisions and requirements for 1000242244 Ontario Inc. to qualify for the income tax exemption:
* **Designation as a "Specified Person":** The notification designates 1000242244 Ontario Inc. (PAN: AACCZ0457B) as the "specified person" for the purposes of clause 23FE of section 10 of the Income-tax Act, 1961.
* **Eligible Investment Period:** The exemption applies to eligible investments made in India on or after the date of publication of the notification (December 28, 2022) but on or before March 31, 2024.
* **Conditions for Exemption:** The assessee must fulfill the following conditions:
* File income tax returns for all relevant previous years within the specified timeframe.
* Furnish a certificate in Form No. 10BBC, certified by an accountant, demonstrating compliance with the provisions of clause 23FE of section 10 of the Act.
* Intimate details of each investment made in India during the quarter within one month from the end of the quarter in Form No. 10BBB.
* Maintain a segmented account of income and expenditure related to the investment qualifying for exemption under clause 23FE.
* Continue to be regulated under the law of the Government of Ontario, Canada.
* Be responsible for administering or investing assets for retirement, social security, employment, disability, death benefits, or similar compensation.
* Ensure that earnings and assets are used only for meeting statutory obligations and defined contributions for participants or beneficiaries, with no portion inuring to the benefit of any other private person (with exceptions for loan repayments).
* Refrain from having loans or borrowings, directly or indirectly, for the purpose of making investment in India.
* Not participate in the day-to-day operations of the investee, while maintaining a monitoring mechanism to protect the investment, including the right to appoint directors.
* Hold the investment for at least three years.
* **Violation Clause:** Violation of any stipulated conditions will render the assessee ineligible for the tax exemption.
* **Effective Date:** The notification comes into force from the date of its publication in the Official Gazette (December 28, 2022).
**6. Target Audience and Stakeholders:**
The primary target audience is 1000242244 Ontario Inc. Other stakeholders include:
* The Central Board of Direct Taxes (CBDT), which is responsible for implementing and overseeing the policy.
* Accountants who are required to provide certificates in Form No. 10BBC.
* The Government of Ontario, Canada, as the regulatory body for the pension fund.
* The Indian investee companies in which Ontario Inc. invests.
* Participants and beneficiaries of the pension funds managed by Ontario Inc.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is the responsible agency for implementing and overseeing this policy.
* **Timelines:**
* Investments must be made between December 28, 2022, and March 31, 2024.
* Income tax returns must be filed on or before the due date specified under subsection 1 of section 139 of the Act.
* Certificates in Form No. 10BBC must be furnished along with the return.
* Details of investments must be intimated quarterly in Form No. 10BBB within one month from the end of the quarter.
* **Procedures:** The policy implicitly establishes a procedure involving investment, compliance with conditions, filing of returns, furnishing of certificates, intimating investment details, and monitoring by the CBDT.
**8. Expected Outcomes / Impact of Changes:**
* **Likely Intended Outcomes:**
* Increased investment in India from 1000242244 Ontario Inc. due to the tax exemption.
* Attraction of foreign capital into the Indian economy.
* Enhanced compliance and transparency in foreign investments through the stipulated conditions.
* Protection of the interests of beneficiaries of pension funds managed by Ontario Inc.
* Promotion of long-term investment as investments need to be held for at least three years.
**9. Conclusion:**
Notification S.O. 6103(E) represents a targeted effort to attract foreign pension fund investment into India by offering income tax exemptions under specific, well-defined conditions. The notification aims to incentivize investment from 1000242244 Ontario Inc. while ensuring compliance, preventing misuse of the exemption, and protecting the interests of pension fund beneficiaries. The success of this policy will depend on the effective implementation and monitoring by the CBDT and the adherence to the stipulated conditions by the specified assessee.
Key Entities Referenced
Ministry of Finance: The Indian government ministry responsible for financial matters.
Department of Revenue: A department within the Ministry of Finance.
CENTRAL BOARD OF DIRECT TAXES: An organization under the Department of Revenue.
Income-tax Act, 1961: A law in India concerning income tax.
Ontario Inc.: The name of the pension fund being specified.
Canada: The country to which the Government of Ontario belongs.
Government of Ontario: The government regulating the pension fund.
New Delhi: The location where the notification was issued.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-28122022-241465
xxxGIDHxxx
CG-DL-E-28122022-241465
xxxGIDExxx
असाधारण
EXTRAORDINARY
भाग II—खण् ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 5860] नई दिल्ली, बुधिार, दिसम्ब र 28, 2022/पौर्ष 7, 1944
No. 5860] NEW DELHI, WEDNESDAY, DECEMBER 28, 2022/PAUSHA 7, 1944
जित्त मत्रं ालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
अजधसचू ना
नई दिल्ली, 28 दिसम्बर, 2022
(आय-कर)
का.आ. 6103(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिसे इसम ें इसके पश्चात
अजधजनयम कहा गया ह)ै की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण 1 के खंड (ग) के उप-खंड (iv) द्वारा प्रित्त िजियों
का प्रयोग करते हुए, पिें न जनजध अर्ाडत्, 1000242244 ओंटाररयो इंक. (पनै : एएसीसीज़ेड0457बी), (जिसे इसम ें इसके
पश्चात जनधाडररती कहा गया ह)ै को, उि खंड के प्रयोिनों के जलए रािपत्र में इस अजधसूचना के प्रकािन की तारीख को या
उसके पश्चात ककंत ु 31 माचड, 2024 को या उससे पूिड भारत म ें उसके द्वारा दकए गए पात्र जिजनधान (जिस े इसमें इसके
पश्चात उि जिजनधान कहा गया ह)ै के सम्बंध म,ें जनम्नजलजखत ितों को परू ा करन े के अधीन रहते हुए, जिजनर्िष्टड व्यजि के
रूप म ेंजिजनर्िष्टड करती ह,ै अर्ातड ्: -
(i) जनधाडररती, उस तारीख से प्रारम्भ होने िाली अिजध, जिसमें उि जिजनधान दकया गया ह ैऔर उस तारीख को,
जिसको ऐसा जिजनधान का पररसमापन दकया गया ह,ै समाप्त होने िाली अिजध के अतं गतड आन े िाले सभी
सुसंगत पूिडिती िर्षों के जलए अजधजनयम की धारा 139 की उप-धारा (1) के अधीन आय की जििरणी प्रस्ट्तुत
करने की जिजनर्िष्टड िेय तारीख को या उससे पूिड आय की जििरणी फाइल करेगा;
(ii) जनधाडररती ऐसी जििरणी के सार् जित्त िर्षड के िौरान अजधजनयम की धारा 10 के खंड (23चड.) के उपबंधों की
अनुपालन के संबंध म ें आय-कर जनयम, 1962 के जनयम 2घख के खंड (vi) के उपबंधों के अनसु ार अजधजनयम
8723 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
की धारा 288 की उपधारा (2) के नीचे स्ट्पष्टीकरण म ें यर्ा पररभाजर्षत दकसी लखे ापाल के प्ररूप
संख्या 10खखग म ेंएक प्रमाण पत्र प्रस्ट्ततु करेगा;
(iii) जनधाडररती भारत म ें जतमाही के िौरान उसके द्वारा दकए गए प्रत्येक जिजनधान के संबंध में ब्यौरों की सूचना
जतमाही के िौरान जतमाही के अंत से एक मास के भीतर आय-कर जनयम, 1962 के जनयम 2घख के खंड (V) के
उपबंधों के अनुसार प्ररूप स.ं 10खखख में िेगा;
(iv) जनधाडररती, ऐसे जिजनधानों के संबंध में, िो अजधजनयम की धारा 10 के खंड (23चड.) के अधीन छूट के जलए
अर्हतड ह,ैं के संबंध में आय और व्यय का खंडिार लेखा बनाए रखेगा;
(v) जनधाडररती ओंटाररयो, कनाडा सरकार की जिजध के अधीन जिजनयजमत होता रहगे ा;
(vi) जनधाडररती, यर्ाजस्ट्र्जत, ऐसी जनजधयों या योिनाओं के भागीिारों या जहताजधकाररयों के जलए सेिाजनिृजत्त,
सामाजिक सुरक्षा, रोिगार, दिव्यांग्ता, मरणोत्तर प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करन े के जलए
स्ट्र्ाजपत एक या अजधक जनजधयों या योिनाओं की कानूनी बाध्यताओं और पररभाजर्षत अजभिायों को पूरा करन े
के जलए आजस्ट्तयों के प्रिासन या जिजनधान के जलए उत्तरिायी होगा;
(vii) जनधाडररती के उपािडनों और आजस्ट्तयों का उपयोग केिल कानूनी बाध्यताओं को और खंड (vi) में जनर्िष्टड
जनजधयों या योिनाओं के सहभाजगयों या फायिाग्राजहयों के जलए पररभाजर्षत अजभिायों को पूरा करन े के जलए
दकया िाए तर्ा पेंिन जनजध के उपािडनों या आजस्ट्तयों का कोई भाग दकसी अन्य प्राइिेट व्यजि के दकसी
फायिा को भारत म ें जिजनधान करन े के प्रयोिन से जभन्न प्रयोिनों हते ु जलए गए ऋण या उधार [अजधनयम की
धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण 2 के खंड (ii) के उपखंड (ख) म ें यर्ापररभाजर्षत] के जलए लेनिारों या
जनक्षेपकताडओं को दकए गए दकसी संिाय को िर्िडत करत े हुए लाग ूनहीं होता ह;ै
(viii) जनधाडररती के पास भारत में जिजनधान करने के प्रयोिनों के जलए, प्रत्यक्षत: या अप्रत्यक्षतः कोई ऋण या उधार
[अजधनयम की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण-2 के खंड (ii) के उपखडं (ख) म ें यर्ापररभाजर्षत] नहीं
होगा; और
(ix) जनधाडररती जिजनधान प्राप्तकता ड [अजधनयम की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण-2 के खंड (i) म ें
यर्ापररभाजर्षत] के दिन प्रजतदिन की संदियाओं म ें भाग नहीं लेगा परं त ु जिजनधान प्राप्तकताड के पास जिजनधान
की संरक्षा करन े के जलए मॉनीटरी तंत्र को, जिसमें जनिेिकों या कायडपालक जनिेिक को जनयुि करने के
अजधकार सजम्मजलत ह,ै जिजनधान प्राप्तकताड के दिन प्रजतदिन की संदियाओं में भाग लेना नहीं समाा िाएगा
(x) जनधाडररती का उि जनिेि अजधजनयम की धारा 10 के खंड (23 चङ) के उप-खंड (ii) के तहत यर्ा अपेजक्षत
कम से कम तीन िर्षों के जलए धाररत रहगे ा
2. अजधजनयम की धारा 10 के खडं (23चड.) और इस अजधसूचना म ें यर्ा उजल्लजखत ितों म ें स े दकसी भी ित ड का
उल्लघं न जनधाडररती को कर छूट के जलए अपात्र ठहराएगा
3. यह अजधसूचना रािपत्र में उसके प्रकािन की तारीख से प्रिृत्त होगी
[अजधसूचना स.ं 128/2022/फा.सं. 500/पीएफ7/एस10(23चड.)/एफटी और टीआर-II]
श्री ित्स सेहरा, अिर सजचि
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 28th December, 2022
(INCOME-TAX)
S.O. 6103(E).—In exercise of the powers conferred by sub-clause (iv) of clause (c) of the
Explanation 1 to clause (23FE) of section 10 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred
to as the Act), the Central Government hereby specifies the pension fund, namely, 1000242244 Ontario Inc.
(PAN: AACCZ0457B), (hereinafter referred to as the assessee) as the specified person for the purposes of
the said clause in respect of the eligible investment made by it in India on or after the date of publication of
this notification in the Official Gazette but on or before the 31st day of March, 2024 (hereinafter referred to
as the said investments) subject to the fulfillment of the following conditions, namely:-[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
(i) the assessee shall file return of income, for all the relevant previous years falling within the period
beginning from the date in which the said investment has been made and ending on the date on
which such investment is liquidated, on or before the due date specified for furnishing the return of
income under sub-section (1) of section 139 of the Act;
(ii) the assessee shall furnish along with such return a certificate in Form No. 10BBC in respect of
compliance to the provisions of clause (23FE) of section 10 of the Act, during the financial year,
from an accountant as defined in the Explanation below sub-section (2) of section 288 of the Act,
as per the provisions of clause (vi) of rule 2DB of the Income –tax Rules, 1962;
(iii) the assessee shall intimate the details in respect of each investment made by it in India during the
quarter within one month from the end of the quarter in Form No. 10BBB, as per the provisions of
clause (v) of rule 2DB of the Income-tax Rules, 1962;
(iv) the assessee shall maintain a segmented account of income and expenditure in respect of such
investment which qualifies for exemption under clause (23FE) of section 10 of the Act;
(v) the assessee shall continue to be regulated under the law of the Government of Ontario, Canada;
(vi) the assessee shall be responsible for administering or investing the assets for meeting the 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;
(vii) the earnings and assets of the assessee should be used only for meeting statutory obligations and
defined contributions for participants or beneficiaries of funds or plans referred to in clause (vi) and
no portion of the earnings or assets of the pension fund inures any benefit to any other private
person; barring any payment made to creditors or depositors for loan or borrowing [as defined in
sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act] taken for
the purposes other than for making investment in India;
(viii) the assessee shall not have any loans or borrowings [as defined in sub-clause (b) of clause (ii) of
Explanation 2 to clause (23FE) of section 10 of the Act], directly or indirectly, for the purposes of
making investment in India; and
(ix) the assessee shall not participate in the day to day operations of investee [as defined in clause (i) of
Explanation 2 to clause (23FE) of section 10 of the Act] 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.
(x) the said investment of the assessee shall be held for at least three years as required under sub-clause
(ii) of clause (23FE) of section 10 of the Act.
2. Violation of any of the conditions as stipulated in the said clause (23FE) of section 10 of the Act
and this notification shall render the assessee ineligible for the tax exemption.
3. This notification shall come into force from the date of its publication in the Official Gazette.
[Notification No. 128/2022/F. No. 500/PF7/S10(23FE)/FT&TR-II]
SRI VATSA SEHRA, Under Secy.
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.