## Policy Analysis Report: Income Tax Exemption for Canada Pension Plan Investment Board Private Holdings 4 Inc.
**1. Executive Summary:**
This report analyzes a notification issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, regarding income tax exemption under Section 10(23FE) of the Income-tax Act, 1961 for the Canada Pension Plan Investment Board Private Holdings 4 Inc. (CPPIB). The notification specifies CPPIB as an eligible entity for tax exemption on eligible investments made in India, subject to certain conditions, primarily related to compliance, reporting, regulation, and operational restrictions. The key finding is that the notification outlines specific criteria and procedures CPPIB must adhere to in order to avail itself of this tax benefit.
**2. Introduction:**
This report aims to provide a comprehensive overview of Notification No. 35/2021, issued by the Central Board of Direct Taxes, based solely on the text of the notification itself. The report will detail the purpose, key provisions, target audience, and potential impact of this notification.
**3. Policy Overview:**
* This is a *new policy* specifying conditions for Income Tax Exemption.
* **Core Objective(s):** Based on the text, the objective is to specify the Canada Pension Plan Investment Board Private Holdings 4 Inc. as a "specified person" eligible for income tax exemption on investments made in India under Section 10(23FE) of the Income-tax Act, 1961, *contingent* on fulfilling the stated conditions.
**4. Background and Rationale:**
* The policy likely addresses the issue of attracting foreign investment into India by offering tax incentives to specific pension funds. By specifying CPPIB as eligible for the exemption under Section 10(23FE), the government aims to encourage investment from this entity within the confines of the requirements for eligible investment. It also ensures transparency and prevents abuse of tax benefits through strict conditions.
**5. Key Provisions / Changes:**
Since this is a new policy, the following are the key provisions outlined in the notification:
* **Eligibility Criteria:** The Canada Pension Plan Investment Board Private Holdings 4 Inc. is specified as an eligible entity ("specified person") for the purposes of Section 10(23FE) of the Income-tax Act, 1961.
* **Investment Period:** The exemption applies to eligible investments made in India on or after April 22, 2021 (the date of the notification's publication) but on or before March 31, 2024.
* **Compliance Requirements:**
* The assessee (CPPIB) must file income tax returns for all relevant previous years, beginning from the investment date to the liquidation date, by the due date specified in Section 139(1) of the Act.
* The assessee must furnish a certificate in Form No. 10BBC, obtained from an accountant, confirming compliance with Section 10(23FE) of the Act during the financial year.
* The assessee must submit details of each investment made in India during the quarter within one month from the end of the quarter in Form No. 10BBB.
* The assessee must maintain a segmented account of income and expenditure related to investments qualifying for the exemption.
* **Operational Restrictions:**
* The assessee must continue to be regulated under the laws of the Government of Canada.
* The assessee must administer or invest assets to meet statutory obligations and defined contributions for retirement, social security, employment, disability, death benefits, or similar compensation plans.
* The earnings and assets of the assessee should be used only for the purposes mentioned above (meeting statutory obligations) and not benefit any other private person. Loans and borrowings are generally prohibited for making investments in India with limited exceptions.
* The assessee cannot have loans or borrowings for making investments in India
* The assessee must not participate in the day-to-day operations of the investee company, although monitoring mechanisms to protect the investment, including the right to appoint directors or executive directors, are permitted.
* **Violation Clause:** Violation of any stipulated condition will render the assessee ineligible for the tax exemption.
* **Effective Date:** The notification comes into force on the date of its publication in the Official Gazette (April 22, 2021).
**6. Target Audience and Stakeholders:**
The primary target audience is the Canada Pension Plan Investment Board Private Holdings 4 Inc. Other stakeholders include:
* The Central Board of Direct Taxes (CBDT).
* Accountants providing certificates (Form 10BBC).
* The Indian government and its various departments.
* Investee companies in India receiving investments from CPPIB.
**7. Implementation Aspects (Inferred):**
* **Responsible agency:** Central Board of Direct Taxes (CBDT) and the Department of Revenue, Ministry of Finance.
* **Timelines:**
* Investments must be made between April 22, 2021, and March 31, 2024.
* Income tax returns must be filed by the due date under Section 139(1) of the Act.
* Form 10BBB must be submitted within one month of the end of each quarter.
* **Procedures:**
* CPPIB must comply with all conditions listed to maintain eligibility for the tax exemption.
**8. Expected Outcomes / Impact of Changes:**
The intended outcomes and impact of this policy are:
* Attract foreign investment from the Canada Pension Plan Investment Board Private Holdings 4 Inc. into India.
* Ensure that the investments are utilized as intended for retirement and social security benefits.
* Maintain regulatory oversight and prevent abuse of the tax exemption through stipulated compliance and operational conditions.
* Promote transparency through reporting requirements.
**9. Conclusion:**
Notification No. 35/2021 is a crucial document that specifies the conditions for granting income tax exemption to the Canada Pension Plan Investment Board Private Holdings 4 Inc. for eligible investments in India. By adhering to the outlined requirements and restrictions, CPPIB can avail itself of this tax benefit, thereby encouraging foreign investment while safeguarding against potential misuse. The notification promotes transparency and ensures that the investment aligns with the policy objectives of supporting retirement and social security benefits. This policy is significant as it can attract substantial foreign investment, boosting the Indian economy and fostering collaboration between India and Canada in the financial sector.
Key Entities Referenced
NEW DELHI: Location where the notification was issued.
Incometax Act, 1961: The primary legislation related to income tax in India.
Central Board of Direct Taxes: The issuing authority for the notification.
Canada Pension Plan Investment Board Private Holdings 4 Inc.: The pension fund specified as the 'assessee' in the notification.
Government of Canada: The country under whose laws the assessee must be regulated.
Incometax Rules, 1962: Rules pertaining to the Income-tax act, 1961
Ministry of Finance: The ministry under which the Central Board of Direct Taxes operates.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-22042021-226719
xxxGIDHxxx
CG-DL-E-22042021-226719
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.ं 1555] नई दिल्ली, बृहस्ट्प जतिार, अप्रलै 22, 2021/ििै ाख 2, 1943
No. 1555] NEW DELHI, THURSDAY, APRIL 22, 2021/VAISAKHA 2, 1943
जित्त मत्रं ालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
अजधसचू ना
नई दिल्ली, 22 अप्रलै , 2021
(आय-कर)
का.आ.1673(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिसे इसम ें इसके पश्चात ्
“अजधजनयम” कहा गया ह)ै के खंड (23चङ) के स्ट्पष्टीकरण1 के खंड (ग) के उपखंड (iv) द्वारा प्रित्त िजियों का प्रयोग करत े
हुए, पेंिन जनजध अर्ाडत,् कनाडा पेंिन योिना जिजनधान बोडड प्राइिेट होलल्डंग्स् (4) इंक, (जिसे इसम ें इसके पश्चात ्
“जनधाडररती” कहा गया ह)ै को, उि खंड के प्रयोिनों के जलए रािपत्र म ें इस अजधसूचना के प्रकािन की तारीख को या उसके
पश्चात ् ककंत ु 31 माच,ड 2024 को या उससे पूिड भारत म ें उसके द्वारा दकए गए पात्र जिजनधान (जिसे इसम ें इसके पश्चात ्
“उि जिजनधान” कहा गया ह)ै के संबंध म,ें जनम्नजलजखत ितों को पूरा करन े के अधीन रहते हुए, जिजनर्िष्टड व्यजि के रूप म ें
जिजनर्िष्टड करती ह,ै अर्ाडत ्:--
(i) जनधाडररती, उस तारीख स े प्रारंभ होन े िाली अिजध, जिसमें उि जिजनधान दकया गया ह,ै और उस तारीख को,
जिसको ऐसा जिजनधान पररसमाप्त दकया गया ह,ै समाप्त होने िाली अिजध के अंतगडत आने िाले सभी सुसंगत
2362 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
पूिडिती िर्षों के जलए अजधजनयम की धारा 139 की उपधारा (1) के अधीन आय की जििरणी प्रस्ट्तुत करन े की
जिजनर्िष्टड िये 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 (23चङ) के उपबंधों की
अनुपालना के संबंध म ें आय-कर जनयम, 1962 के जनयम 2घख के खंड (vi) के उपबंधों के अनुसार धारा 288 की
उपधारा (2) के नीच े स्ट्पष्टीकरण म ें यर्ा पररभाजर्षत दकसी लेखपाल स े प्ररूप स ं 10खखग म ें एक प्रमाणपत्र प्रस्ट्तुत
करेगा ।
(iii) जनधाडररती भारत म ें जतमाही के िौरान उसके द्वारा दकए गए प्रत्येक जिजनधान के संबंध म ें ब्यौरों की सूचना जतमाही
के िौरान जतमाही के अंत स े एक मास के भीतर आय-कर जनयम, 1962 के जनयम 2घख के खंड (v) के उपबंधों के
अनुसार प्ररूप स.ं 10खखख म ें िेगा;
(iv) जनधाडररती, ऐस े जिजनधानों के संबंध म,ें िो अजधजनयम की धारा 10 के खंड (23चङ) के अधीन छूट के जलए अर्हतड
ह,ैं के संबंध म ेंआय और व्यय का खंडिार लेखा बनाए रखेगा ।
(v) जनधाडररती कनाडा सरकार की जिजध के अधीन जिजनयजमत होता रहगे ा ।
(vi) जनधाडररती, यर्ाजस्ट् र्जत, ऐसी जनजधयों या योिनाओं के भागीिारों या जहताजधकाररयों के जलए सेिाजनिृजत् त,
सामाजिक सुरक्षा, रोिगार, दिव्यांग्ता, मरणोत् तर प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करने के जलए
स्ट् र्ाजपत एक या अजधक जनजधयों या योिनाओं की कानूनी बाध् यताओं और पररभाजर्षत अजभिायों को पूरा करने के
जलए आजस्ट् तयों के प्रिासन या जिजनधान के जलए उत् तरिायी होगा;
(vii) जनधाडररती के उपािडनों और आजस्ट्तयों का उपयोग केिल कानूनी बाध्यताओं को और खंड (vi) म ें जनर्िष्टड जनजधयों या
योिनाओं के सहभाजगयों या फायिाग्राजहयों के जलए पररभाजर्षत अजभिायों को पूरा करने 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 स े जभन्न प्रयोिनों के जलए जलए गए ऋण या उधार [अजधजनयम की धारा 10 के खंड
23चङ के स्ट्पष्टीकरण 2 के खंड (ii) के उपखंड (ख) म ें यर्ापररभाजर्षत] के जलए लने िारों या जनक्षेपकताडओं को दकए
गए दकसी संिाय को िर्िडत करते हुए लाग ू नहीं होता ह;ै
(viii) जनधाडररती के पास भारत म ें जिजनधान करन े के प्रयोिनों के जलए, प्रत्यक्षत: या अप्रत्यक्षत: कोई ऋण या उधार
[अजधजनयम की धारा 10 के खंड (23चङ) के स्ट्पष्टीकरण-2 के खडं (ii) के उपखडं (ख) म ें यर्ापररभाजर्षत] नहीं
होगा;
(ix) जनधाडररती जिजनधान प्राप्तकताड [अजधजनयम की धारा 10 खंड 23चङ) के स्ट्पष्टीकरण-2 के खंड (i) म ें
यर्ापररभाजर्षत] के दिन प्रजतदिन की संदियाओं म ें भाग नहीं लेगा परं तु जिजनधान प्राप्तकता ड के पास जिजनधान की
संरक्षा करन े के जलए मॉनीटरी तंत्र को, जिसम ें जनिेिकों या कायडपालक जनििे क को जनयिु करने के अजधकार
सजममजलत ह,ै जिजनधान प्राप्तकता ड के दिन प्रजतदिन की संदियाओं म ेंभाग लेना नहीं समझा िाएगा ।
2. अजधजनयम की धारा 10 के खंड (23चङ) और इस अजधसचू ना म ें यर्ा उजल्लजखत ितों में स े दकसी भी ितड का उल्लघं न
जनधाडररती को कर छूट के जलए अपात्र ठहराएगा ।
3. यह अजधसूचना रािपत्र म ेंउसके प्रकािन की तारीख स े प्रित्तृ होगी ।
[अजधसूचना स.ं 35 /2021/फा.स.ं 370142/38/2020-टीपीएल]
िािेि अख्तर, जनिेिक (कर नीजत और जिधान प्रभाग)[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 22nd April, 2021
(INCOME-TAX)
S.O.1673(E).—In exercise of 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, the Canada Pension Plan Investment Board Private Holdings
(4) Inc., (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 “said investments”) subject to the
fulfilment of the following conditions, namely:-
(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 and as per 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 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 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.
2. Violation of any of the conditions as stipulated in the said clause (23FE) of the 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. 35 /2021/ F. No. 370142/38/2020-TPL]
JAVED AKHTAR, Director (Tax Policy and Legislation Division)
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.