Amendment of Rule 17C of the Income tax Rules, 1962 to include investments in ONDC Ltd by a person authorised under section 4 of the Payment and Settlement Systems Act, 2007

Okay, I will analyze the provided policy text and generate the report as requested, adhering strictly to the information within the document. **Report: Analysis of Income-tax 10th Amendment Rules, 2022** **1. Executive Summary:** This report analyzes the Income-tax 10th Amendment Rules, 2022, as published in the Gazette of India on April 22, 2022. This amendment to the Income-tax Rules, 1962 introduces a new clause (vb) in rule 17C. This clause allows for investment made by entities authorized under the Payment and Settlement Systems Act, 2007, in Open Network for Digital Commerce Ltd. (ONDC) to qualify under specific provisions of the Income-tax Act. The report details the specific changes, the likely rationale, affected stakeholders, and potential impact of this amendment, based solely on the provided text. **2. Introduction:** This report provides an informative analysis of the Income-tax 10th Amendment Rules, 2022, based on the official government notification published in the Gazette of India. The purpose is to inform affected parties about the specific changes introduced by this amendment and their potential implications. **3. Policy Overview:** * **Original Policy:** This amendment modifies the Income-tax Rules, 1962. * **Core Objective(s):** The amendment aims to incentivize/facilitate investment into Open Network for Digital Commerce Ltd (ONDC) by authorized entities operating under the Payment and Settlement Systems Act, 2007, through specific tax considerations. This inferred objective is to promote digital commerce and interoperable digital payments in India. **4. Background and Rationale:** This amendment appears designed to encourage investment in the Open Network for Digital Commerce Ltd (ONDC). By creating a specific clause within the Income-tax Rules, the government likely intends to provide tax benefits or incentives for entities authorized under the Payment and Settlement Systems Act, 2007, to invest in ONDC. This suggests a policy push to foster the growth and adoption of ONDC and promote open protocol models for digital commerce and payments. The provision focuses on equity share capital, bonds, and debentures, further suggesting the policy goal of supporting the organization's capitalization through incentivized investment. **5. Key Provisions / Changes:** * **Specific Part of Original Policy Changed:** Rule 17C of the Income-tax Rules, 1962. Specifically, a new clause is added *after* clause (va). * **New Rule/Provision:** Clause (vb) is inserted in Rule 17C. This clause states: "vb investment made by a person, authorised under section 4 of the Payment and Settlement Systems Act, 2007 51 of 2007, in the equity share capital or bonds or debentures of Open Network for Digital Commerce Ltd, being a company incorporated under subsection 2 of section 7 read with subsection 1 of section 8 of the Companies Act, 2013 18 of 2013, for participating in network based open protocol models which enable digital commerce and interoperable digital payments in India;". * **Difference/Effect of Change:** This amendment likely grants certain tax benefits or exemptions (the *exact* nature of which cannot be determined from the provided text alone) under the Income-tax Act to investments made by entities authorized under the Payment and Settlement Systems Act, 2007, when those investments are made in the equity, bonds, or debentures of ONDC. It is aimed at companies contributing to digital commerce and interoperable digital payments. **6. Target Audience and Stakeholders:** * Entities authorized under Section 4 of the Payment and Settlement Systems Act, 2007, such as payment system providers and payment gateways. * Open Network for Digital Commerce Ltd (ONDC). * The Department of Revenue and the Central Board of Direct Taxes (CBDT). **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is responsible for administering the Income-tax Rules, 1962 and therefore will be the responsible body for implementing and overseeing this amendment. * **Timelines/Procedures:** The amendment came into force on April 22, 2022, the date of its publication in the Official Gazette. The notification itself doesn't specify additional procedures, but it can be inferred that the CBDT will likely issue further guidance or clarifications on how to avail the benefits of this amendment. * **Specific to the Changes:** Entities wishing to claim the benefits from this amendment will need to demonstrate that they are authorized under Section 4 of the Payment and Settlement Systems Act, 2007, and that their investments are in ONDC, meeting the criteria specified in the amendment (equity, bonds, or debentures) and enabling digital commerce. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome is an increase in investment in ONDC by authorized payment system entities. This, in turn, is expected to accelerate the development and adoption of ONDC and promote interoperable digital payments and digital commerce in India. The amendment is designed to make investment in ONDC more attractive, by incentivizing authorized payment system providers to allocate capital to ONDC. **9. Conclusion:** The Income-tax 10th Amendment Rules, 2022, represents a targeted effort to encourage investment in ONDC by payment system entities authorized under the Payment and Settlement Systems Act, 2007. By creating a new clause within the Income-tax Rules, the government aims to leverage tax incentives to stimulate investment, promote ONDC's growth, and foster the broader development of digital commerce and interoperable digital payments in India. While the specific tax benefits associated with this amendment are not detailed in the provided text, the overall intent is clear: to financially incentivize investment in ONDC through authorized channels.

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