Date: 2022-10-13Category: Extra OrdinaryState: Union GovernmentCountry: India
Notification of 2589555 Ontario Limited (PANAABCZ1393D) as a pension fund under sub clause (iv) of clause (c) of Explanation 1 to the clause (23FE) of section 10 of the Income tax Act, 1961
## Policy Analysis Report: Notification No. 1142022F
**1. Executive Summary:**
This report analyzes Notification No. 1142022F, issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, concerning income tax exemptions for specific foreign pension funds investing in India. This notification specifies "2589555 Ontario Limited" as a specified person eligible for tax exemption under Section 10(23FE) of the Income-tax Act, 1961, subject to fulfillment of stipulated conditions regarding investment period, return filing, compliance certification, investment details intimation, accounts maintenance, regulatory compliance in the country of origin, usage of earnings and assets, and restrictions on loans, borrowings, and participation in day-to-day operations of the investee. The key finding is the formal specification of a pension fund as eligible for the exemption, accompanied by detailed conditions ensuring accountability and alignment with the objectives of Section 10(23FE).
**2. Introduction:**
This report provides a policy analysis of Notification No. 1142022F, issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, focusing on the specified tax exemptions under Section 10(23FE) of the Income-tax Act, 1961. The analysis is based solely on the information presented within the provided text of the notification.
**3. Policy Overview:**
* Core Objective(s) as stated or inferred *from the provided text*: The primary objective of this notification is to specify a particular pension fund, "2589555 Ontario Limited," as eligible for the income tax exemption under Section 10(23FE) of the Income-tax Act, 1961, provided it adheres to specific conditions. This aligns with the broader objective of Section 10(23FE) to incentivize foreign investment in India by exempting income arising from such investments.
**4. Background and Rationale:**
* Briefly explain the likely problem/issue the policy addresses, inferring from the text.
This notification is part of a broader framework designed to attract foreign investment into India. Section 10(23FE) likely aims to address the reluctance of foreign pension funds to invest in India due to potential tax liabilities. By offering tax exemptions, the government seeks to encourage these funds to allocate capital to Indian markets, which can contribute to economic growth and development. The conditions attached to the exemption are meant to safeguard against misuse and ensure that the investments genuinely benefit the Indian economy.
**5. Key Provisions / Changes:**
* Detail the main components, rules, and actions mandated by the *entire provided text*. What does the policy establish or require?
The notification establishes the following key provisions and requirements:
* **Specification of Assessee:** Formally designates "2589555 Ontario Limited" (PAN: AABCZ1393D) as the "specified person" eligible for the Section 10(23FE) tax exemption.
* **Investment Period:** Eligible investments must be made on or after the date of publication of the notification (October 13, 2022) and on or before March 31, 2024.
* **Return Filing:** The assessee must file income tax returns for all relevant years within the investment period, adhering to the due dates specified under Section 139(1) of the Act.
* **Compliance Certification:** The assessee must furnish Form No. 10BBC, certified by an accountant, verifying compliance with Section 10(23FE) provisions during the financial year, as per Rule 2DB(vi) of the Income Tax Rules, 1962.
* **Investment Details Intimation:** The assessee must submit details of each investment made in India within one month from the end of each quarter in Form No. 10BBB, as per Rule 2DB(v) of the Income Tax Rules, 1962.
* **Segmented Accounting:** The assessee must maintain separate accounts for income and expenditure related to the investments qualifying for the Section 10(23FE) exemption.
* **Regulatory Compliance:** The assessee must continue to be regulated under the laws of the Government of Ontario, Canada.
* **Purpose of Investment:** The assessee must invest funds for meeting statutory obligations and defined contributions for retirement, social security, or similar benefits for participants or beneficiaries.
* **Restriction on Benefit to Private Persons:** No portion of the pension fund's earnings or assets should benefit any private person, except for payments to creditors or depositors for legitimate loans or borrowings.
* **Restriction on Loans/Borrowings:** The assessee must not have any loans or borrowings for the purpose of making investments in India.
* **Restriction on Day-to-Day Operations:** The assessee should not participate in the day-to-day operations of the investee. Monitoring mechanisms to protect the investment, including the right to appoint directors, are permitted.
* **Violation Clause:** Violation of any stipulated conditions will render the assessee ineligible for the tax exemption.
* **Effective Date:** The notification comes into effect from the date of its publication in the Official Gazette (October 13, 2022).
**6. Target Audience and Stakeholders:**
Based on the provided text, the primary target audience is "2589555 Ontario Limited". Other stakeholders include:
* The Central Board of Direct Taxes (CBDT)
* Accountants responsible for certifying compliance (Form 10BBC).
* The investee companies in India receiving investments from the specified pension fund.
* The participants or beneficiaries of the funds or plans administered by the assessee
**7. Implementation Aspects (Inferred):**
* **Responsible agency/bodies mentioned?** The Central Board of Direct Taxes (CBDT) is the responsible agency. The Income Tax Department will likely be involved in monitoring compliance.
* **Any timelines or procedures specified *in the text*?**
* The investment must be made between October 13, 2022, and March 31, 2024.
* Investment details must be reported quarterly using Form 10BBB within one month of the quarter's end.
* Income tax returns must be filed annually as per Section 139(1) of the Income-tax Act.
* Compliance certification must be submitted annually using Form 10BBC.
**8. Expected Outcomes / Impact of Changes:**
* What are the likely intended outcomes based on the policy's stated provisions in the text?
The intended outcomes include:
* Increased investment by "2589555 Ontario Limited" into the Indian market.
* Greater financial stability and growth within the Indian economy due to increased foreign investment.
* Ensuring that investments are used for their intended purpose (retirement, social security, etc.) and do not benefit private individuals inappropriately.
* Promoting compliance with Indian tax laws by foreign investors.
* Attracting further foreign pension funds into the Indian market by demonstrating a clear and regulated investment environment.
**9. Conclusion:**
Notification No. 1142022F specifies "2589555 Ontario Limited" as eligible for income tax exemption under Section 10(23FE) of the Income-tax Act, 1961, contingent upon fulfilling stringent conditions. This policy aims to encourage foreign investment in India while ensuring accountability and preventing misuse of the exemption. The significance lies in the potential to attract substantial capital inflows from foreign pension funds, contributing to the growth and development of the Indian economy, provided that all conditions as stated in the notification are adhered to.
Key Entities Referenced
New Delhi: Capital of India, place of notification.
Incometax Act, 1961: Refers to the primary legislation governing income tax in India.
Central Government: The executive authority of the Union of India.
2589555 Ontario Limited: A pension fund, also referred to as the assessee, seeking specified person status under the Incometax Act.
India: The country where the eligible investment is being made.
Central Board of Direct Taxes: A department under the Ministry of Finance.
Government of Ontario, Canada: The regulatory authority under whose laws the pension fund is regulated.
Official Gazette: The official publication for government notifications and regulations in India.
Ministry of Finance: The ministry responsible for financial matters of the government.
Department of Revenue: A department under the Ministry of Finance.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-13102022-239628
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CG-DL-E-13102022-239628
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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.ं 4662] नई दिल्ली, बृहस्ट्प जतिार, अक्त बू र 13, 2022/आजि न 21, 1944
No. 4662] NEW DELHI, THURSDAY, OCTOBER 13, 2022/ASVINA 21, 1944
जित्त मत्रं ालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
अजधसचू ना
नई दिल्ली, 13 अक्त ूबर, 2022
(आय-कर)
का.आ. 4872(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिसे इसम ें इसके पश्चात
अजधजनयम कहा गया ह)ै की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण 1 के खंड (ग) के उप खंड (iv) द्वारा प्रित्त िजियों का
प्रयोग करते हुए, पेंिन जनजध अर्ाडत,् 2589555 ओंटाररयो जलजमटेड (पैन: एएबीसीज़ेड1393डी), (जिसे इसम ें इसके
पश्चात जनधाडररती कहा गया ह)ै को, उि खंड के प्रयोिनों के जलए रािपत्र में इस अजधसूचना के प्रकािन की तारीख को या
उसके पश्चात ककंत ु 31 माचड, 2024 को या उससे पूिड भारत म ें उसके द्वारा दकए गए पात्र जिजनधान (जिस े इसमें इसके
पश्चात उि जिजनधान कहा गया ह)ै के सम्बंध म,ें जनम्नजलजखत ितों को परू ा करन े के अधीन रहते हुए, जिजनर्िष्टड व्यजि के
रूप म ेंजिजनर्िष्टड करती ह,ै अर्ातड ्: -
(i) जनधाडररती, उस तारीख से प्रारम्भ होने िाली अिजध, जिसमें उि जिजनधान दकया गया ह ैऔर उस तारीख को,
जिसको ऐसा जिजनधान का पररसमापन दकया गया ह,ै समाप्त होने िाली अिजध के अतं गतड आन े िाले सभी
सुसंगत पूिडिती िर्षों के जलए अजधजनयम की धारा 139 की उप धारा (1) के अधीन आय की जििरणी प्रस्ट्तुत
करने की जिजनर्िष्टड िेय तारीख को या उससे पूिड आय की जििरणी फाइल करेगा;
6946 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(ii) जनधाडररती ऐसी जििरणी के सार् जित्त िर्षड के िौरान अजधजनयम की धारा 10 के खंड (23चड.) के उपबंधों की
अनुपालन के संबंध म ें 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 लेखापाल के प्ररूप संख्या
10खखग में एक प्रमाण पत्र प्रस्ट्तुत करेगा;
(iii) जनधाडररती भारत म ें 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 स.ं 10खखख में िेगा;
(iv) जनधाडररती, ऐसे जिजनधानों के संबंध में, िो अजधजनयम की धारा 10 के खंड (23चड.) के अधीन छूट के जलए
अर्हतड ह,ैं के संबंध में आय और व्यय का खंडिार लेखा बनाए रखेगा;
(v) जनधाडररती ओंटाररयो, कनाडा सरकार की जिजध के अधीन जिजनयजमत होता रहगे ा;
(vi) जनधाडररती, यर्ाजस्ट्र्जत, ऐसी जनजधयों या योिनाओं के भागीिारों या जहताजधकाररयों के जलए सेिाजनिृजत्त,
सामाजिक सुरक्षा, रोिगार, दिव्यांग्ता, मरणोत्तर प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करन े के जलए
स्ट्र्ाजपत एक या अजधक जनजधयों या योिनाओं की कानूनी बाध्यताओं और पररभाजर्षत अजभिायों को पूरा करन े
के जलए आजस्ट्तयों के प्रिासन या जिजनधान के जलए उत्तरिायी होगा;
(vii) 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 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 करन े के प्रयोिन से जभन्न प्रयोिनों हते ु जलए गए ऋण या उधार [अजधनयम की
धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण 2 के खंड (ii) के उपखंड (ख) म ें यर्ापररभाजर्षत] के जलए लेनिारों या
जनक्षेपकताडओं को दकए गए दकसी संिाय को िर्िडत करत े हुए लाग ूनहीं होता ह;ै
(viii) जनधाडररती के पास भारत में जिजनधान करने के प्रयोिनों के जलए, प्रत्यक्षत: या अप्रत्यक्षत कोई ऋण या उधार
[अजधनयम की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण-2 के खंड (ii) के उपखडं (ख) म ें यर्ापररभाजर्षत] नहीं
होगा; और
(ix) जनधाडररती जिजनधान प्राप्तकता ड [अजधनयम की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण-2 के खंड (i) म ें
यर्ापररभाजर्षत] के दिन प्रजतदिन की संदियाओं म ें भाग नहीं लेगा परं त ु जिजनधान प्राप्तकताड के पास जिजनधान
की संरक्षा करन े के जलए मॉनीटरी तंत्र को, जिसमें जनिेिकों या कायडपालक जनिेिक को जनयुि करने के
अजधकार सजम्मजलत ह,ै जिजनधान प्राप्तकताड के दिन प्रजतदिन की संदियाओं में भाग लेना नहीं समझा िाएगा।
2. अजधजनयम की धारा 10 के खंड (23चड.) और इस अजधसूचना में यर्ा उजल्लजखत ितों में से दकसी भी ितड का
उल्लघं न जनधाडररती को कर छूट के जलए अपात्र ठहराएगा।
3. यह अजधसूचना रािपत्र में उसके प्रकािन की तारीख से प्रिृत्त होगी।
[अजधसूचना स.ं 114/2022/फा.संख्या500/पीएफ3/एस10(23चड.)/एफटी और टीआर-।।-भाग(2)]
श्री ित्स सेहरा, अिर सजचि
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 13th October, 2022
(INCOME-TAX)
S.O. 4872(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, 2589555 Ontario Limited
(PAN: AABCZ1393D), (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 the “the said investments”) subject to the fulfillment of the following conditions, namely:-[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
(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, 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) 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 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. 114/2022/F. No. 500/PF3/S10(23FE)/FT&TR-II-Part(2)]
SRI VATSA SEHRA, Under Secy.
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.