Executive Summary:
This notification, issued by the Ministry of Finance's Department of Revenue, designates India International Exchange IFSC Limited as a recognised stock exchange under the Income-tax Act, 1961, effective from the date of its publication in the Official Gazette. The recognition is subject to specific conditions regarding trading in derivatives. The notification remains valid until the Securities and Exchange Board of India (SEBI) approval is withdrawn or expires, and compliance with stipulated conditions is mandatory to avoid rescinding by the Central Government.
Key Points / Main Content:
* **Recognition:**
* India International Exchange IFSC Limited, Gandhinagar, Gujarat, is recognised as a stock exchange.
* PAN: AAGCB8819B.
* Recognition is effective from the date of publication in the Official Gazette.
* **Conditions for Trading in Derivatives:**
* The stock exchange must have SEBI approval for trading in derivatives and function according to SEBI guidelines.
* Client particulars, including unique client identity number and PAN, must be duly recorded and stored.
* A complete audit trail of all derivative market transactions must be maintained for seven years.
* Derivative market transactions, once registered, must not be erased.
* Modifications to registered transactions are allowed only for genuine errors, with data maintained on all modified transactions.
* A monthly statement in Form No. 3BB must be submitted to the Director General of Incometax Intelligence and Criminal Investigation, New Delhi, within fifteen days from the last day of each month.
* **Validity and Compliance:**
* The notification remains in force until SEBI approval is withdrawn or expires.
* Violation of stipulated conditions may lead to rescinding of the notification by the Central Government.
Impact Analysis:
* **India International Exchange IFSC Limited:**
* *Impact:* Recognised as a stock exchange for Income-tax Act purposes, enabling certain benefits and compliance obligations.
* *Action Required:* Ensure compliance with all conditions related to derivative trading, including obtaining SEBI approval, maintaining records, and submitting monthly statements.
* **Securities and Exchange Board of India (SEBI):**
* *Impact:* Oversight and regulatory responsibility for derivative trading activities of the India International Exchange IFSC Limited.
* *Action Required:* Ensure the stock exchange adheres to SEBI guidelines and conditions.
* **Director General of Incometax Intelligence and Criminal Investigation, New Delhi:**
* *Impact:* Receives monthly statements regarding derivative market transactions.
* *Action Required:* Process and analyse the submitted Form No. 3BB statements.
* **Central Government:**
* *Impact:* Authority to rescind the notification if conditions are violated or SEBI approval is withdrawn.
* *Action Required:* Monitor compliance and take appropriate action if violations occur.
* **Taxpayers/Clients trading on India International Exchange IFSC Limited:**
* *Impact:* Subject to the exchange's enhanced record-keeping and reporting requirements.
* *Action Required:* Ensure accurate provision of information to the exchange, including PAN and unique client identity number.
Key Entities Referenced
Incometax Act, 1961: The primary legislation governing income tax in India, referenced in the context of powers conferred for the notification.
Incometax Rules, 1962: The rules framed under the Incometax Act, 1961, further specifying the procedures and guidelines, specifically Rule 6DDB is mentioned.
Central Board of Direct Taxes: The apex body responsible for direct tax administration in India, issuing the notification.
India International Exchange IFSC Limited, Gandhinagar, Gujarat: A recognized stock exchange, notified for the purpose of Section 43 of the Incometax Act, 1961.
Securities and Exchange Board of India: The regulatory body for the securities market in India, responsible for approving and overseeing trading in derivatives.
Securities and Exchange Board of India Act, 1992: The act under which the Securities and Exchange Board of India was established.
Director General of Incometax Intelligence and Criminal Investigation, New Delhi: The recipient of the monthly statement in Form No. 3BB, related to derivative market transactions.
Form No. 3BB: The form in which the monthly statement regarding derivative market transactions needs to be submitted.
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4741 GI/2018 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
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[अिधसूचना सं. 35/2018/फा. सं. 225/111/2018-आईटीए- II]
राजराजे]री आर., अवर सिचव,(आईटीए-II), सीबीडीटी
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 31st July, 2018
S.O. 3968(E).—In exercise of the powers conferred under clause (ii) of Explanation 1 of clause (d) of proviso
to sub-section (5) of Section 43 of the Income-tax Act, 1961(43 of 1961) read with sub-rule(4) of Rule 6DDB of the
Income-tax Rules,1962, the Central Government hereby notifies India International Exchange (IFSC) Limited,
Gandhinagar, Gujarat (PAN: AAGCB8819B) as a ‘recognised stock exchange’ for the purpose of said clause with
effect from the date of publication of this notification in the Official Gazette, subject to fulfilment of following
conditions in respect of trading in derivatives, namely;
(i) the stock exchange shall have the approval of the Securities and Exchange Board of India established
under the Securities and Exchange Board of India Act, 1992(15 of 1992) in respect of trading in derivatives
and it shall function in accordance with the guidelines or conditions laid down by the Securities and
Exchange Board of India;
(ii) it shall ensure that the particulars of the client (including unique client identity number and PAN) are
duly recorded and stored in its databases;
(iii) It shall maintain a complete audit trail of all transactions (in respect of derivative market) for a period
of seven years on its system;
(iv) it shall ensure that transactions (in respect of derivative market) once registered in the system are not
erased;
(v) it shall ensure that the transactions (in respect of derivative market) once registered in the system are
modified only in cases of genuine error and maintain data regarding all transactions (in respect of derivative
market) registered in the system which have been modified and submit a monthly statement in Form No.
3BB to the Director General of Income-tax (Intelligence and Criminal Investigation), New Delhi within
fifteen days from the last day of each month to which such statement relates.
3. This notification shall remain in force until the approval granted by the Securities and Exchange Board of India
is withdrawn or expires. Further, if any of the conditions stipulated in para above are violated, it may lead to rescinding
of this notification by the Central Government.
[Notification No.35/2018/F. No. 225/111/2018-ITA-II]
RAJARAJESWARI R., Under Secy. (ITA-II), CBDT.
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.