## Policy Analysis Report: Income-tax Notification S.O. 1856(E)
**1. Executive Summary:**
This report analyzes Notification S.O. 1856(E), a new policy issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, concerning income tax regulations. The notification specifies the OMERS Administration Corporation as a “specified person” under Section 10(23FE) of the Income-tax Act, 1961, granting it potential tax exemptions on eligible investments made in India. However, this exemption is contingent upon fulfilling several conditions outlined in the notification, relating to filing returns, providing certificates, maintaining segmented accounts, and adhering to regulatory requirements. The report details these conditions, the target audience, and the expected impact of this notification on OMERS Administration Corporation and potentially similar foreign pension funds.
**2. Introduction:**
The purpose of this report is to provide an informative analysis of Notification S.O. 1856(E), issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, based solely on the provided policy text. The report will outline the core objectives, key provisions, target audience, and potential implications of this notification.
**3. Policy Overview:**
This is a new policy.
* **Core Objective(s) as stated or inferred from the provided text:** The core objective, as inferred from the text, is to specify a particular pension fund (OMERS Administration Corporation) as a “specified person” for the purpose of Section 10(23FE) of the Income-tax Act, 1961, thereby potentially enabling tax exemptions on its eligible investments in India. This is likely designed to encourage foreign pension funds to invest in India.
**4. Background and Rationale:**
This is a new policy.
* **Briefly explain the likely problem/issue the policy addresses, inferring from the text:** The policy likely addresses the need to attract foreign investment into India, particularly from pension funds. By offering tax exemptions under certain conditions, the government aims to make India a more attractive destination for long-term investments managed by foreign pension funds. The detailed conditions suggest a concern for ensuring compliance and preventing misuse of the tax exemption.
**5. Key Provisions / Changes:**
This is a New Policy
* Detail the main components, rules, and actions mandated by the *entire provided text*.
* **Specification of Assessee:** The notification specifies OMERS Administration Corporation as the “assessee” and the “specified person” under Section 10(23FE) 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 (May 13, 2021) 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 from an accountant regarding compliance with Section 10(23FE).
* Intimate investment details quarterly in Form No. 10BBB.
* Maintain a segmented account of income and expenditure for the investment.
* 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, or death benefits.
* Limit non-qualifying assets (not used for the above benefits) to no more than 10% of the total assets, provided those assets are owned by the Government of Ontario, Canada.
* Use earnings and assets solely for statutory obligations and defined contributions for participants or beneficiaries, with no benefit accruing to any other private person (with exceptions for loan repayments).
* Earnings from non-qualifying assets may be used for other purposes if credited to the account of the Government of Ontario, Canada.
* Not have any loans or borrowings for making investments in India.
* Not participate in the day-to-day operations of the investee company, excluding monitoring mechanisms to protect the investment and appoint directors.
* **Violation Clause:** Violation of any condition will render the assessee ineligible for the tax exemption.
**6. Target Audience and Stakeholders:**
The primary target audience is OMERS Administration Corporation. Secondary stakeholders include:
* Other foreign pension funds considering investments in India.
* The Government of Ontario, Canada (due to asset ownership provisions).
* Accountants and legal professionals advising pension funds.
* The Central Board of Direct Taxes (CBDT), responsible for implementation and enforcement.
* Indian companies receiving investment from OMERS Administration Corporation
**7. Implementation Aspects (Inferred):**
* **Responsible agency/bodies mentioned:** The Central Board of Direct Taxes (CBDT) under the Ministry of Finance, Department of Revenue, is the responsible body.
* **Any timelines or procedures specified in the text:**
* Investment period: May 13, 2021, to March 31, 2024.
* Filing of income tax returns: On or before the due date specified under Section 139(1) of the Act.
* Submission of Form No. 10BBB: Within one month from the end of each quarter.
* The assessee is required to furnish a certificate in Form No. 10BBC
**8. Expected Outcomes / Impact of Changes:**
* **What are the likely intended outcomes based on the policy's stated provisions in the text?**
* Increased investment by OMERS Administration Corporation in India.
* Potential for attracting other foreign pension funds to invest in India by showcasing a clear regulatory framework and tax incentives.
* Enhanced transparency and accountability in the investment process through mandated reporting and compliance requirements.
* Ensuring that tax benefits are utilized for the intended purpose of providing retirement and social security benefits, rather than benefiting private individuals.
**9. Conclusion:**
Notification S.O. 1856(E) is a significant step towards attracting foreign investment from pension funds into India. By specifying OMERS Administration Corporation as a “specified person” under Section 10(23FE) of the Income-tax Act, 1961, the notification offers potential tax benefits on eligible investments. However, these benefits are contingent upon strict adherence to the conditions outlined in the notification, emphasizing the government's focus on ensuring compliance and preventing misuse of the tax exemption. The notification has the potential to increase investment in India and potentially stimulate economic growth.
Key Entities Referenced
CENTRAL BOARD OF DIRECT TAXES: A government organization under the Department of Revenue, Ministry of Finance.
New Delhi: The location of the notification, likely the capital of India.
Incometax Act, 1961: The primary legislation governing income tax in India, also referred to as 'the Act'.
OMERS Administration Corporation: A pension fund specified by the Central Government as a specified person for the purposes of clause 23FE of section 10 of the Incometax Act, 1961.
India: The country where the eligible investment is made by the pension fund.
Official Gazette: The official publication for government notifications in India.
Government of Ontario, Canada: The government regulating the assessee, OMERS Administration Corporation.
Incometax Rules, 1962: Rules pertaining to the Incometax Act.
KAMLESH CHANDRA VARSHNEY: Jt. Secy., Tax Policy and Legislation Division. Signatory of the notification.
Tax Policy and Legislation Division: Division under which the notification was issued.
Mayapuri, New Delhi: Location of the Dte. of Printing at Government of India Press
Delhi: Location of Controller of Publications
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-13052021-226992
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CG-DL-E-13052021-226992
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असाधारण
EXTRAORDINARY
भाग II—खण् ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 1729] नई दिल्ली, बृहस्ट्प जतिार, मई 13, 2021/ििै ाख 23, 1943
No. 1729] NEW DELHI, THURSDAY, MAY 13, 2021/VAISAKHA 23, 1943
जित्त मत्रं ालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
अजधसचू ना
नई दिल्ली, 13 मई, 2021
(आय-कर)
का.आ. 1856(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिसे इसमें इसके पश्चात् “अजधजनयम” कहा
गया है) के खंड (23चङ) के स्ट्पष्टीकरण 1 के खंड (ग) के उपखंड (iv) द्वारा प्रित्त िजियों का प्रयोग करते हुए, पेंिन जनजध अर्ाडत,्
ओमेसड एजिजनसरेिन कापोरेिन, (जिसे इसमें इसके पश्चात् “जनधाडररती” कहा गया है) को, उि खंड के प्रयोिनों के जलए रािपत्र में इस
अजधसूचना के प्रकािन की तारीख को या उसके पश्चात् ककंतु 31 माचड, 2024 को या उससे पूि ड भारत में उसके द्वारा दकए गए पात्र
जिजनधान (जिसे इसमें इसके पश्चात् “उि जिजनधान” कहा गया ह)ै के संबंध में, जनम्नजलजखत ितों को पूरा करने के अधीन रहते हुए,
जिजनर्िष्टड व्यजि के रूप में जिजनर्िष्टड करती है, अर्ाडत ्:--
(i) जनधाडररती, उस तारीख से प्रारंभ होने िा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 आन े िाले सभी सुसंगत पूिडिती िर्षों के जलए
अजधजनयम की धारा 139 की उपधारा (1) के अधीन आय की जििरणी प्रस्ट्तुत करने की जिजनर्िष्टड िये तारीख को या उससे पूि ड
आय की जििरणी फाइल करेगा ।
2619 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(ii) जनधाडररती ऐसी जििरणी के सार् जित्त िर्ष ड के िौरान, अजधजनयम की धारा 10 के खंड (23चङ) के उपबंधों की अनुपालना के
संबंध में आय-कर जनयम, 1962 के जनयम 2घख के खंड (vi) के उपबंधों के अनुसार अजधजनयम की धारा 288 की उपधारा (2)
के नीचे स्ट्पष्टीकरण में यर्ा पररभाजर्षत दकसी लेखपाल से प्ररूप सं 10खखग में एक प्रमाणपत्र प्रस्ट्तुत करेगा ।
(iii) जनधाडररती भारत में 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 सं. 10
खखख में िगे ा;
(iv) जनधाडररती, ऐसे जिजनधानों के संबधं में, िो अजधजनयम की धारा 10 के खंड (23चङ) के अधीन छूट के जलए अर्हतड ह,ैं के संबंध
में आय और व्यय का खंडिार लेखा बनाए रखेगा ।
(v) जनधाडररती ओंटाररयो सरकार, कनाडा की जिजध के अधीन जिजनयजमत होता रहगे ा ।
(vi) जनधाडररती, यर्ास्जर्जत, ऐसी जनजधयों या योिनाओं के भागीिारों या जहताजधकाररयों के जलए सेिाजनिृत्जत, सामाजिक सुरक्षा,
रोिगार, दिव्यांग्ता, मरणोत्तर प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करने के जलए स्र्ाजपत एक या अजधक जनजधयों
या योिनाओं की कानूनी बाधय् ताओं और पररभाजर्षत अजभिायों को पूरा करने के जलए आस्जतयों के प्रिासन या जिजनधान के
जलए उत्तरिायी होगा;
(vii) जनधाडररती द्वारा जनिजे ित और जनिेजित पररसंपजत्तयों के कुल मूल्य का िस प्रजतित से अजधक नहीं खंड (vi) में सूचीबद्ध उद्देश्य
के अलािा प्रयोिनार्ड अनुमेय बिते ऐसी पररसंपजत्तयााँ पूणड रूप से प्रत्यक्ष या परोक्ष रूप से ओंटाररयो सरकार, कनाडा के
स्ट्िाजमत्ि मे हो और ऐसी पररसंपजत्तयााँ जिधरन पर ओंटाररयो सरकार, कनाडा मे जनजहत ह ै।
(viii) 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 करने के जलए दकया िाए तर्ा पेंिन जनजध के उपािडनों
या आजस्ट्तयों का कोई भाग दकसी अन्य प्राइिेट व्यजि के दकसी फायिा को भारत में जिजनधान करने के प्रयोिन से 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)
में यर्ापररभाजर्षत] के जलए लेनिारों या जनक्षेपकताडओं को दकए गए दकसी संिाय को िर्ितड करते हुए लाग ूनहीं होता ह;ै
(ix) खंड (vii) मे संिर्भडत आय तर्ा पररसंपजत्तयों का उपयोग खंड (viii) मे सूचीबद्ध उद्देश्य के अलािा प्रयोिनार्ड दकया िा सकता
ह ै । बिते उि आय को या तो ओंटाररयो सरकार, कनाडा के खाते मे िमा दकया िाए अर्िा सरकार द्वारा नाजमत दकसी अन्य
खाते म,ें तादक अन्य जनिी व्यजि को आय का कोई भी भाग लाभाजन्ित न कर सके ।
(x) जनधाडररती के पास भारत में जिजनधान करने के प्रयोिनों के जलए, प्रत्यक्षत: या अप्रत्यक्षत: कोई ऋण या उधार [अजधजनयम की
धारा 10 के खंड (23चङ) के स्ट्पष्टीकरण-2 के खंड (ii) के उपखंड (ख) में यर्ापररभाजर्षत] नहीं होगा;
(xi) जनधाडररती जिजनधान प्राप्तकता ड [अजधजनयम की धारा 10 खंड 23चङ) के स्ट्पष्टीकरण-2 के खंड (i) में यर्ापररभाजर्षत] के दिन
प्रजतदिन की संदियाओं में भाग नहीं लेगा पंरतु जिजनधान प्राप्तकताड के पास जिजनधान की संरक्षा करने के जलए मॉनीटरी तंत्र को,
जिसमें जनििे कों या कायडपालक जनििे क को जनयुि करने के अजधकार सजममजलत ह,ै जिजनधान प्राप्तकताड के दिन प्रजतदिन की
संदियाओं में भाग लेना नहीं समझा िाएगा ।
2. अजधजनयम की धारा 10 के खंड (23चङ) और इस अजधसूचना में यर्ा उजल्लजखत ितों में से दकसी भी ितड का उल्लंघन जनधाडररती
को कर छूट के जलए अपात्र ठहराएगा ।
3. यह अजधसूचना रािपत्र में उसके प्रकािन की तारीख से प्रिृत्त होगी ।
[अजधसूचना स.ं 66/2021/फा. सं.370142/13/2021-टीपीएल]
कमलेि चंद्र िार्ष्णेय, संयुि सजचि(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 13th May, 2021
(INCOME-TAX)
S.O. 1856(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 OMERS Administration Corporation, (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 fulfillment 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, 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) not more than ten per cent. of the total value of the assets administered or invested by the assessee are
allowed for the purpose other than the purpose listed at clause (vi) provided such assets are wholly owned
directly or indirectly by the Government of Ontario, Canada and such assets vest in the Government of
Ontario, Canada upon dissolution;
(viii) 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;
(ix) the earning from assets referred to in clause (vii) may be used for purpose other than the purpose listed as
in clause (viii) provided that the said earnings are credited either to the account of Government of Ontario,
Canada or any other account designated by such Government so that no portion of the earnings inures any
benefit to any private person;
(x) 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
(xi) 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 section 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. 66/2021/ F. No. 370142/13/2021-TPL]
KAMLESH CHANDRA VARSHNEY, Jt. Secy. (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.