## Policy Analysis Report: Income Tax Notification S.O. 1855(E)
**1. Executive Summary:**
This report analyzes Income Tax Notification S.O. 1855(E), published on May 13, 2021, which specifies the Government Employees Superannuation Board (GESB) of Australia as a "specified person" under Section 10(23FE) of the Income-tax Act, 1961. This specification allows GESB to be eligible for income tax exemption on eligible investments made in India, subject to certain conditions regarding reporting, compliance, regulation, and the nature of the funds administered. The notification aims to facilitate foreign investment in India by pension funds while ensuring compliance with Indian tax laws and safeguarding the purpose of the invested funds.
**2. Introduction:**
The purpose of this report is to provide an informative overview of Income Tax Notification S.O. 1855(E) based solely on the provided policy text, outlining its key provisions, implications, and expected outcomes. This analysis is intended for stakeholders affected by this notification, including the GESB, related Australian government entities, and Indian regulatory bodies.
**3. Policy Overview:**
* **Core Objective(s):** Based on the text, the core objective is to incentivize and regulate investment in India by the Government Employees Superannuation Board (GESB), an Australian pension fund, by granting it a specific income tax exemption under Section 10(23FE) of the Income-tax Act, 1961, subject to conditions.
**4. Background and Rationale:**
* **New Policy:** This is a new specification under an existing clause. The notification likely addresses the need to attract foreign investment from specific entities like pension funds. It suggests that the government aims to promote investment in India by foreign pension funds by extending tax benefits, while also ensuring the investments are made in accordance with established guidelines and regulations. The requirements specified seem designed to prevent abuse of the tax exemption and to ensure the funds are used for their intended purpose (retirement benefits).
**5. Key Provisions / Changes:**
As a new specification under Section 10(23FE), the key provisions are:
* **Specification of Assessee:** The notification specifies the Government Employees Superannuation Board (GESB) as the "specified person" for the purpose of Section 10(23FE) of the Income-tax Act, 1961, allowing it to potentially avail of the tax exemption.
* **Eligible Investment Period:** The tax 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 to be eligible for the tax exemption:
* File income tax returns for all relevant previous years.
* Furnish a certificate in Form No. 10BBC from an accountant, complying with the provisions of clause 23FE of section 10 of the Act.
* Intimate investment details in Form No. 10BBB within one month from the end of each quarter.
* Maintain segmented accounts of income and expenditure for investments qualifying for exemption under clause 23FE of section 10 of the Act.
* Continue to be regulated under Australian law.
* Administer or invest assets for retirement, social security, or similar benefits.
* Limit investments for other purposes (not listed above) to a maximum of ten per cent of total assets, and ensure those assets are owned by and vest in the Government of Australia.
* Use earnings and assets only for statutory obligations and defined contributions to participants or beneficiaries, with no benefit inuring to private persons (except for payments to creditors or depositors for permissible loans).
* Earnings from assets used for purposes other than the main objective must be credited to the Government of Australia or its designated account.
* Not have any loans or borrowings for making investments in India.
* Not participate in the day-to-day operations of the investee company.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders are:
* The Government Employees Superannuation Board (GESB) of Australia.
* The Australian Government (particularly entities overseeing GESB).
* The Central Board of Direct Taxes (CBDT) and other Indian tax authorities.
* Accountants providing certificates for compliance.
* Investee companies in India that receive investments from GESB.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is the primary responsible agency for administering this notification.
* **Timelines:** Investments must be made between May 13, 2021, and March 31, 2024. Quarterly reporting using Form 10BBB is required within one month after the end of each quarter. Annual income tax returns and Form 10BBC are required according to standard Income-tax Act timelines.
* **Procedures:** GESB needs to comply with the specified reporting requirements (Forms 10BBB and 10BBC), maintain segmented accounts, and ensure adherence to all listed conditions to maintain eligibility for the tax exemption.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this notification are:
* Increased investment in India by the Government Employees Superannuation Board (GESB).
* Enhanced compliance with Indian tax laws by foreign pension funds.
* Ensuring that the tax benefits are utilized for their intended purpose – providing retirement and social security benefits.
* Attracting further investments into India from foreign pension funds who may see this is a positive development.
**9. Conclusion:**
Income Tax Notification S.O. 1855(E) is a targeted policy designed to encourage foreign investment from the Government Employees Superannuation Board (GESB) of Australia into India, specifically offering tax exemptions under Section 10(23FE) of the Income-tax Act, 1961, subject to stringent conditions. The notification's significance lies in its potential to attract foreign capital while also ensuring that such investments comply with Indian laws and serve the intended purpose of providing retirement and social security benefits. Careful adherence to the stipulated conditions is crucial for GESB to avail the intended benefits.
Key Entities Referenced
NEW DELHI: Place of publication of the Gazette of India.
Ministry of Finance: The Indian government ministry responsible for financial matters.
Department of Revenue: A department within the Ministry of Finance.
Central Board of Direct Taxes: An organization under the Department of Revenue responsible for direct taxes.
Income-tax Act, 1961: Refers to the primary law governing income tax in India.
Government Employees Superannuation Board: A pension fund specified as the assessee for the purposes of section 10(23FE) of the Income-tax Act, 1961.
India: The country where the eligible investment is made.
Official Gazette: The official publication in which the notification is published.
Incometax Rules, 1962: Rules pertaining to the Income-tax Act, 1961.
Government of Australia: The government under whose laws the assessee is regulated.
Tax Policy and Legislation Division: The division within the Ministry of Finance responsible for tax policy and legislation.
Mayapuri, New Delhi: Location of the Government of India Press.
Delhi: Location of the Controller of Publications.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-13052021-226990
xxxGIDHxxx
CG-DL-E-13052021-226990
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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.ं 1728] नई दिल्ली, बृहस्ट्प जतिार, मई 13, 2021/ििै ाख 23, 1943
No. 1728] NEW DELHI, THURSDAY, MAY 13, 2021/VAISAKHA 23, 1943
जित्त मंत्रालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोड)ड
अजधसचू ना
नई दिल्ली, 13 मई, 2021
(आय-कर)
का.आ. 1855 (अ).— केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिसे इसम ें इसके पश्चात ्
“अजधजनयम” कहा गया ह)ै के खंड (23चङ) के स्ट्पष्टीकरण 1 के खंड (ग) के उपखंड (iv) द्वारा प्रित्त िजियों का प्रयोग करते
हुए, पेंिन जनजध अर्ातड ,् गिनमड ेंट एम्प्लॉईस सुपरएनुएिन बोडड, (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 ् ककंतु 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 रहत े हुए, जिजनर्िष्टड व्यजि के रूप म ेंजिजनर्िष्टड करती ह,ै अर्ाडत ् :--
(i) जनधाडररती, उस तारीख स े प्रारंभ होने िाली अिजध, जिसम ें उि जिजनधान दकया गया ह,ै और उस तारीख को,
जिसको ऐसा जिजनधान पररसमाप्त दकया गया ह,ै समाप्त होने िाली अिजध के अंतगडत आने िाल े सभी सुसंगत
2618 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 करने 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 में आय-कर जनयम, 1962 के जनयम 2घख के खंड (vi) के उपबंधों के अनसु ार अजधजनयम की
धारा 288 की उपधारा (2) के नीच े स्ट्पष्टीकरण म ें यर्ा पररभाजर्षत दकसी लेखपाल स े प्ररूप सं 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 से एक मास के भीतर आय-कर जनयम, 1962 के जनयम 2घख के खंड (v) के
उपबंधों के अनुसार प्ररूप स.ं 10 खखख 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 ऑस्ट्रेजलया सरकार की जिजध के अधीन जिजनयजमत होता रहगे ा ।
(vi) जनधाडररती, यर्ासज् र्जत, ऐसी जनजधयों या योिनाओं के भागीिारों या जहताजधकाररयों के जलए सेिाजनिृत्जत,
सामाजिक सुरक्षा, रोिगार, दिव्यांग्ता, मरणोतत् र प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करन े के जलए
सर्् ाजपत एक या अजधक जनजधयों या योिनाओं की कानूनी बाध्यताओं और पररभाजर्षत अजभिायों को पूरा करन े
के जलए आसज् तयों के प्रिासन या जिजनधान के जलए उत्तरिायी होगा;
(vii) जनधाडररती द्वारा जनिेजित और जनिेजित पररसंपजत्तयों के कुल मूल्य का िस प्रजतित स े अजधक नहीं खंड (vi) में
सूचीबद्ध उद्देश्य के अलािा प्रयोिनार्ड अनुमेय बिते ऐसी पररसंपजत्तयााँ पूण ड रूप स े प्रत्यक्ष या परोक्ष रूप स े
ऑस्ट्रेजलया सरकार के स्ट्िाजमत्ि म ेहो और ऐसी पररसंपजत्तयााँ जिधरन पर ऑस्ट्रेजलया सरकार म े जनजहत ह ै।
(viii) 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 करन े 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 करने 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) में यर्ापररभाजर्षत] के जलए लेनिारों या जनक्षेपकताडओं को दकए
गए दकसी संिाय को िर्िडत करते हुए लाग ूनहीं होता ह;ै
(ix) खंड (vii) म े संिर्भडत आय तर्ा पररसंपजत्तयों का उपयोग खंड (viii) म े सूचीबद्ध उद्देश्य के अलािा प्रयोिनार्ड
दकया िा सकता ह ै । बिते उि आय को या तो ऑस्ट्रेजलया सरकार के खाते म े ि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 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 खंड (ii) के उपखंड (ख) म ें यर्ापररभाजर्षत] नहीं
होगा;
(xi) जनधाडररती जिजनधान प्राप्तकता ड [अजधजनयम की धारा 10 खंड 23चङ) के स्ट्पष्टीकरण-2 के खंड (i) म ें
यर्ापररभाजर्षत] के दिन प्रजतदिन की संदियाओं म ें भाग नहीं लेगा पंरत ु जिजनधान प्राप्तकताड के पास जिजनधान की
संरक्षा करन े के जलए मॉनीटरी तंत्र को, जिसमें जनिेिकों या कायडपालक जनिेिक को जनयुि करने के अजधकार
सजम्पमजलत ह,ै जिजनधान प्राप्तकता डके दिन प्रजतदिन की संदियाओं म ेंभाग लेना नहीं समझा िाएगा ।[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
2. अजधजनयम की धारा 10 के खंड (23चङ) और इस अजधसूचना म ें यर्ा उजल्लजखत ितों में स े दकसी भी ित ड का उल्लघं न
जनधाडररती को कर छूट के जलए अपात्र ठहराएगा ।
3. यह अजधसूचना रािपत्र म ेंउसके प्रकािन की तारीख स े प्रिृत्त होगी ।
[अजधसूचना स.ं 65/2021/फा.स.ं 370142/15/2021-टीपीएल]
कमलेि चंद्र िार्ष्णेय, संयुि सजचि (कर नीजत और जिधान प्रभाग)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 13th May 2021
(INCOME-TAX)
S.O. 1855(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 Government Employees Superannuation Board,
(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 Australia;
(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 Australia and such assets vest in the Government of Australia
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;4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(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
Australia 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 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. 65/2021/ F. No. 370142/15/2021-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.