Home India Ministry of Finance Income tax 2nd amendment, 2025 Tax incentives to IFSC...
Date: 27-Jan-2025 Category: Extra Ordinary State: Union Government Country: India

Income tax 2nd amendment, 2025 Tax incentives to IFSC

Issued by Ministry of Finance · Department of Revenue

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Executive Summary & Key Takeaways

Description of the Gazette Notification

  • This gazette notification, numbered 10/2025, issued by the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, on January 27, 2025, details amendments to the Income-tax Rules, 1962. These amendments are titled the Income-tax (Second Amendment) Rules, 2025 and came into effect on the date of publication.
  • The amendments clarify and specify conditions related to Venture Capital Funds, Finance Companies operating in International Financial Services Centres (IFSCs), and investment limits for retail schemes and Exchange Traded Funds (ETFs).

Key Changes

  • Insertion of Rule 2DAA: Defines conditions for Venture Capital Funds under section 10(23FB) of the Income Tax Act, 1961, aligning them with the International Financial Services Centres Authority (Fund Management) Regulations, 2022.
  • Insertion of Rule 21ACA: Specifies permissible activities for Finance Companies located in IFSCs under section 94B of the Income Tax Act, 1961, including lending, factoring, and treasury functions. Mandates that interest paid by such companies on non-resident debt must be in foreign currency.
  • Amendment of Rule 21AIA: Adds conditions for retail schemes and ETFs under section 10(4D) of the Income Tax Act, 1961. These include investment diversification limits (e.g., maximum 25% in a single investor for retail schemes, mandatory listing for ETFs) and compliance with the International Financial Services Centres Authority (Fund Management) Regulations, 2022.

Impact Analysis

Impact on Venture Capital Funds

  • Potential for improved investor confidence and increased investment in IFSCs.

Impact on Finance Companies in IFSCs

  • Requirement of foreign currency interest payments on non-resident debt may impact financing strategies.

Impact on Retail Schemes and ETFs

  • Increased compliance burden for fund managers to adhere to specified regulations.

Suggested Action Items

  • Provide training to relevant personnel on the amended rules.

Key Entities Referenced

Ministry of Finance (Department of Revenue): The issuing authority of the notification. Central Board of Direct Taxes (CBDT): The body responsible for administering direct taxes in India. Income-tax Act, 1961 (43 of 1961): The principal legislation governing income tax in India, which the amendment rules modify. Income-tax Rules, 1962: The rules amended by this notification. International Financial Services Centres Authority Act, 2019 (50 of 2019): Legislation governing the International Financial Services Centres (IFSCs). International Financial Services Centres Authority (Fund Management) Regulations, 2022: Regulations referenced in the amendments, concerning fund management within IFSCs. International Financial Services Centres Authority (Finance Company) Regulations, 2021: Regulations referenced in the amendments, concerning finance companies within IFSCs. Special Economic Zones Act, 2005 (28 of 2005): Legislation defining 'International Financial Services Centre'.
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रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99 सी.जी.-डी.एल.-अ.-27012025-260520 CG-DxLx-xEG-I2D7H0x1x2x0 25-260520 xxxGIDExxx असाधारण EXTRAORDINARY भाग II—खण् ड 3—उप-खण्ड (i) PART II—Section 3—Sub-section (i) प्राजधकार स ेप्रकाजित PUBLISHED BY AUTHORITY स.ं 47] नई दिल्ली, सोमिार, िनिरी 27, 2025/माघ 7, 1946 No. 47] NEW DELHI, MONDAY, JANUARY 27, 2025/MAGHA 7, 1946 जित्त मत्रं ालय (रािस्ट्ि जिभाग) (केंद्रीय प्रत्यक्ष कर बोडड) अधिसचू ना नई दिल्ली, 27 िनिरी, 2025 स.ं 10/2025 आय-कर सा.का.जन. 76(अ).— केंद्रीय प्रत्यक्ष कर बोडड आय-कर अजधजनयम, 1961 (1961 का 43) की धारा 10 के खंड (4घ) के स्ट्पष्टीकरण का खडं (ग) के उपखडं (i) के मि (I) के उप-मि (ख), खंड (23चख) के स्ट्पष्टीकरण के खडं (ख) के उप-खंड (क) की मि (II) की उप-मि (iv) और धारा 94ख की उपधारा (5) के खडं (iv) के साथ पठित धारा 295 द्वारा प्रित्त िजियों का प्रयोग करत े हुए, एतद्द्वारा आयकर जनयम, 1962 म ें और संिोधन करन े के जलए जनम्नजलजखत जनयम बनाता ह,ै अथाडत:् - 1. (1) इन जनयमों का संजक्षप्त नाम आयकर (िसू रा संिोधन) जनयम, 2025 ह।ै (2) य ेरािपत्र म ें उनके प्रकािन की तारीख स े प्रिृत्त होंगे। 649 GI/2025 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] 2. आयकर जनयम, 1962 म,ें (क) जनयम 2घक के पश्चात ्जनम्नजलजखत को अतं ःस्ट्थाजपत दकया िाएगा, अथातड ् :- "धारा 10 के खंड (23चख) के जलए िोजखम पूंिी जनजध की ितें। 2घकक.¬– धारा 10 के खडं (23चख) के स्ट्पष्टीकरण के खंड (ख) के उप-खंड (क) के मि (II) के उप-मि (iv) के प्रयोिनों के जलए, अतं राष्ट्रड ीय जित्तीय सेिा केंद्र प्राजधकरण (जनजध प्रबंधन) जिजनयम, 2022 के जिजनयम 18 के उप-जिजनयम (2) म ें जनर्िडष्ट िोजखम पूंिी जनजध को अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण अजधजनयम, 2019 (2019 का 50) के अधीन बनाए गए अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण (जनजध प्रबंधन) जिजनयम, 2022 के अधीन जिजनयजमत प्रिग ड 1 िैकजल्पक जनिेि जनजध के रूप म ें माना िाएगा। (ख) जनयम 21कग के पश्चात,् जनम्नजलजखत को अंत:स्ट्थाजपत दकया िाएगा, अथाडत:् - "धारा 94ख के जलए दकसी अतं रराष्ट्रीय जित्तीय सिे ा केंद्र म ें जस्ट्थत जित्त कंपनी के जलए ित ें और गजतजिजधया ं । 21कगक.– (1) धारा 94ख की उपधारा (5) के खडं (iv) के प्रयोिनों के जलए, दकसी भी अंतराडष्ट्रीय जित्तीय सेिा केंद्र म ें जस्ट्थत जित्त कंपनी केिल जनम्नजलजखत गजतजिजधयों म ेंसे एक या अजधक को कायाडजवित करेगी, अथाडत्: - (i) ऋण, प्रजतबद्धताओं और प्रत्याभूजतयों, ऋण िृजद्ध, प्रजतभूजतकरण, जित्तीय पट्टे के रूप म ें उधार; (ii) प्राजप्तयों का फेक्टर और समपहरण; या (iii) िैजिक या क्षेत्रीय कॉपोरेट रेिरी केंद्र के कृत्य िैसे उधार लेना, उधार िाता, मुद्रा या िस्ट्तु िोजखम या जनिेि की गई हाजन स ेबचन ेके उपाय, नकि प्रबंधन, संरजचत ऋण, इंरा ग्रुप फाइनेंससंग, जित्तीय बिट और इसी प्रकार की अवय रेिरी सेिाए ं और गजतजिजधयां। (2) दकसी अजनिासी द्वारा िारी दकसी ऋण के संबंध म ेंऐसी जित्त कंपनी द्वारा, िो उधार लेन ेिाला ह,ै संित्त दकया िा रहा ब्याि जििेिी करेंसी म ें होगा। स्ट्पष्टीकरण.–इस जनयम के प्रयोिनों के जलए, पि- (i) "जित्त कंपनी" स ेअंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण अजधजनयम, 2019 (2019 का 50) के अधीन बनाए गए अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण (जित्त कंपनी) जिजनयम, 2021 के जिजनयम 2 के उप-जिजनयम (1) के खडं (ड.) म ें पठरभाजित एक जित्त कंपनी अजभप्रेत ह;ै और (ii) "अंतराडष्ट्रीय जित्तीय सेिा केंद्र" का िही अथ ड होगा िो जििेि आर्थडक िोन अजधजनयम, 2005 (2005 का 28) की धारा 2 के खंड (थ) म ें उसका ह।ै "; (ग) जनयम 21 कझक म,ें- (i) उप-जनयम (3) के पश्चात,् जनम्नजलजखत को अतं :स्ट्थाजपत दकया िाएगा, अथाडत,् - "(4) धारा 10 के खंड (4घ) के स्ट्पष्टीकरण के खंड (ग) के उप-खंड (i) के मि (I) के उप मि (ख) प्रयोिनों के जलए, (क) खुिरा स्ट्कीम जनम्नजलजखत ितों को परू ा करेगी, अथाडत्: - (i) इसम ेंकम स ेकम बीस जनिेिक होंगे, और कोई भी एकल जनिेिक ऐसी स्ट्कीम म ेंपच्चीस प्रजतित स े अजधक का जनिेि नहीं करेगा;[भाग II—खण् ड 3(i)] भारत का रािपत्र : असाधारण 3 (ii) यह अपन ेसहयुि म ेंप्रबंधन के अधीन अपनी कुल आजस्ट्तयों के पच् चीस प्रजतित स ेअजधक जनििे नहीं करेगा; (iii) यह असूचीबद्ध प्रजतभूजतयों म ें प्रबंधन के अधीन अपनी कुल आजस्ट्तयों के पंद्रह प्रजतित स े अजधक जनिेि नहीं करेगा; और (iv) यह दकसी एकल कंपनी म ेंप्रबंधन के अधीन अपनी कुल आजस्ट्तयों के िस प्रजतित स ेअजधक जनिेि नहीं करेगा। (ख) एक्सचेंि रेडडे फंड जनम्नजलजखत ितों को परू ा करेगा, अथाडत:- (i) यह अजनिायड रूप स े दकसी मावयता प्राप्त स्ट्टॉक एक्सचेंि म ें सचू ीबद्ध होगा और व्यापार करेगा; और (ii) यह अतं राडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण अजधजनयम, 2019 (2019 का 50) के अधीन बनाए गए अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण (जनजध प्रबंधन) जिजनयम, 2022 म ें जिजनर्िष्टड आिश्यकताओं का अनुपालन करेगा।" (ii) स्ट्पष्टीकरण के स्ट्थान पर जनम्नजलजखत को रखा िाएगा, अथाडत्:- "स्ट्पष्टीकरण.-इस जनयम के प्रयोिन के जलए, पि- (iii) "सहयुि" का िही अथ ड होगा िो अंतराष्ट्रड ीय जित्तीय सेिा केंद्र प्राजधकरण अजधजनयम, 2019 (2019 का 50) के अधीन बनाए गए अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण (जनजध प्रबंधन) जिजनयम, 2022 के जिजनयम 2 के उप-जिजनयम (1) के खडं (ड.) म ें समनुिेजित ह;ै (iv) "जनजध प्रबंधन इकाई" का िही अथड होगा िो अतं राडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण अजधजनयम, 2019 (2019 का 50) के अधीन बनाए गए अंतराडष्ट्रीय जित्तीय सेिा केंद्र प्राजधकरण (जनजध प्रबंधन) जिजनयम, 2022 के जिजनयम 2 के उप-जिजनयम (1) के खंड (त) म ेंसमनुिेजित ह;ै (v) "जिजनर्िडष्ट जनजध" का िही अथ डहोगा िो अजधजनयम की धारा 10 के खंड (4घ) के स्ट्पष्टीकरण के खंड (ग) के उप-खंड (i) म ेंसमनिु ेजित ह।ै " [अजधसूचना संख्या 10 /2025/फा. स.ं 370142/26/2024-टीपीएल] सौरभ िैन, अिर सजचि ठटप्पण: मूल जनयम भारत के रािपत्र, असाधारण, भाग-II, खडं 3, उपखंड (ii) म ें संख्यांक का.आ. 969(अ), तारीख 26 माच,ड 1962 द्वारा प्रकाजित दकए गए थ ेऔर अंजतम बार अजधसूचना संख्या सा.का.जन.67(अ) तारीख 21 िनिरी, 2025 द्वारा संिोजधत दकए गए थे।4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 27th January, 2025 No. 10/2025 INCOME-TAX G.S.R. 76(E).—In exercise of the powers conferred by section 295 read with sub-item (b) of item (I) of sub- clause (i) of clause (c) of the Explanation to clause (4D), sub-item (iv) of item (II) of sub-clause (A) of clause (b) of the Explanation to clause (23FB) of section 10 and clause (iv) of sub-section (5) of section 94B of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income- tax Rules, 1962, namely:___ 1. (1) These rules may be called the Income-tax (Second Amendment) Rules, 2025. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962,– (a) after rule 2DA, the following shall be inserted, namely:– “Conditions for the Venture Capital Fund for the clause (23FB) of section 10.– 2DAA. For the purposes of sub-item (iv) of item (II) of sub-clause (A) of clause (b) of Explanation to clause (23FB) of section 10, the Venture Capital Fund as referred to in sub-regulation (2) of regulation 18 of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 shall be construed as Category I Alternative Investment Fund regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019).”; (b) after rule 21AC, the following shall be inserted, namely:– “Conditions and activities for the Finance Company located in any International Financial Services Centre for section 94B.– 21ACA.– (1) For the purposes of clause (iv) of sub-section (5) of section 94B, the Finance Company located in any International Financial Services Centre shall only carry out one or more of the following activities, namely:- (i) lending in the form of loans, commitments and guarantees, credit enhancement, securitisation, financial lease; (ii) factoring and forfaiting of receivables; or (iii) functions of Global or Regional Corporate Treasury Centre such as borrowings, lending, hedging of currency or commodity risk or investments, cash management, structured credit, intra group financing, financial budgeting and similar other such treasury services and activities. (2) The interest being paid by such Finance Company, being the borrower, in respect of any debt issued by a non-resident, shall be in foreign currency. Explanation.– For the purposes of this rule, the expressions— (i) “Finance Company” means a finance company as defined in clause (e) of sub-regulation (1) of regulation 2 of the International Financial Services Centres Authority (Finance Company) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); and (ii) “International Financial Services Centre” shall have the meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).”;[भाग II—खण् ड 3(i)] भारत का रािपत्र : असाधारण 5 (c) in rule 21AIA,– (i) after sub-rule (3), the following shall be inserted, namely,– “(4) For the purposes of sub-item (b) of item (I) of sub-clause (i) of clause (c) of Explanation to clause (4D) of section 10, (A) the retail scheme shall satisfy the following conditions, namely:- (i) it shall have at least twenty investors with no single investor investing more than twenty- five per cent. in such scheme; (ii) it shall not make any investment exceeding twenty-five per cent. of its total assets under management in its associate; (iii) it shall not make any investment exceeding fifteen per cent. of its total assets under management in unlisted securities; and (iv) it shall not make any investment exceeding ten per cent. of its total asset under management in a single company. (B) the Exchange Traded Fund shall satisfy the following conditions, namely:- (i) it shall be mandatorily listed and traded on a recognised stock exchange; and (ii) it shall comply with the requirements as specified in International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019).”; (ii) for the Explanation, the following shall be substituted, namely,– “Explanation.– For the purpose of this rule, the expressions— (iii) “associate” shall have the meaning as assigned to it in clause (e) of sub-regulation (1) of regulation 2 of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); (iv) “fund management entity” shall have the same meaning as assigned to it in clause (p) of sub- regulation (1) of regulation 2 of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); (v) "specified fund" shall have the same meaning as assigned to it in sub-clause (i) of clause (c) of the Explanation to clause (4D) of section 10 of the Act.”. [Notification No. 10/2025/ F. No.370142/26/2024-TPL] SOURABH JAIN, Under Secy. Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, section 3, sub-section (ii) vide number S.O. 969(E), dated the 26th March, 1962 and were last amended vide notification number G.S.R. 67(E) dated the 21st January, 2025. 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.

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