Date: 2021-08-03Category: Extra OrdinaryState: Union GovernmentCountry: India
Notification of 2726247 Ontario Inc as specified person under sub clause (iv) of clause (c) of the Explanation 1 to clause (23FE) of section 10 of the Income tax Act,1961.
## Policy Analysis Report: Notification No. 84/2021 - Income Tax Act Amendment
**1. Executive Summary:**
This report analyzes Notification No. 84/2021, issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, which amends the Income-tax Act, 1961. The notification specifies "2726247 Ontario Inc." as a specified person for the purpose of section 10, clause 23FE, thereby potentially entitling them to certain income tax exemptions on eligible investments made in India. The key finding of this report highlights the conditions and requirements that "2726247 Ontario Inc." must fulfil to qualify for this exemption, including specific reporting and operational restrictions.
**2. Introduction:**
The purpose of this report is to provide an informative analysis of Notification No. 84/2021, focusing on the key provisions, implications, and intended outcomes of the amendment to the Income-tax Act, 1961, based solely on the content of the provided policy text.
**3. Policy Overview:**
This notification serves as an amendment to the Income-tax Act, 1961.
* **Core Objective(s):** The primary objective, as inferred from the text, is to specify a particular pension fund, "2726247 Ontario Inc.," as eligible for potential income tax exemptions under Section 10, clause 23FE of the Income-tax Act, 1961, subject to fulfilling specific conditions.
**4. Background and Rationale:**
The notification aims to facilitate foreign investment from specific pension funds into India by offering tax exemptions. The rationale for this amendment seems to be to attract investments from qualifying foreign pension funds, potentially boosting the Indian economy. By specifying particular entities like "2726247 Ontario Inc.," the government can encourage investment while ensuring that the funds adhere to strict regulatory and operational guidelines.
**5. Key Provisions / Changes:**
This notification introduces the following key changes concerning "2726247 Ontario Inc.":
* **Specification as 'Specified Person':** "2726247 Ontario Inc." is designated as a "specified person" under subclause (iv) of clause (c) of Explanation 1 to clause 23FE of Section 10 of the Income-tax Act, 1961, opening the possibility for eligible investment exemption.
* **Investment Timeframe:** The eligibility applies to investments made on or after the date of publication of the notification (August 3, 2021) and on or before March 31, 2024.
* **Conditions for Exemption:** The notification outlines several conditions that "2726247 Ontario Inc." must meet to qualify for the tax exemption:
* Filing income tax returns for all relevant previous years.
* Furnishing a certificate in Form No. 10BBC regarding compliance with clause 23FE of section 10.
* Intimating investment details quarterly in Form No. 10BBB.
* Maintaining segmented accounts of income and expenditure related to the exempt investment.
* Continuous regulation under the law of the Government of Ontario, Canada.
* Being responsible for administering or investing assets for statutory obligations and defined contributions for retirement, social security, employment, disability, death benefits.
* Restriction of assets used for other than meeting the statutory obligations to not more than ten percent of the total value of assets, provided those assets are wholly owned directly or indirectly by the Government of Ontario, Canada, and those assets vest in the Government of Ontario, Canada upon dissolution.
* Earnings and assets must be used only for meeting statutory obligations, and defined contributions for participants. No portion of the earnings or assets of the pension fund should inure any benefit to any other private person.
* Earnings from assets may be used for purposes other than those listed, provided that the said earnings are credited either to the account of the 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.
* No loans or borrowings can be taken directly or indirectly for making investments in India.
* Restricts involvement in the day-to-day operations of the investee, though monitoring mechanisms are permitted.
* **Violation Clause:** Non-compliance with these conditions will render "2726247 Ontario Inc." ineligible for the tax exemption.
**6. Target Audience and Stakeholders:**
The primary target audience is "2726247 Ontario Inc." The key stakeholders include:
* "2726247 Ontario Inc."
* The Central Board of Direct Taxes (CBDT)
* The Indian government and its revenue departments.
* Accountants as defined in the Explanation below subsection 2 of section 288.
* Investees as defined in clause i of Explanation 2 to clause 23FE of section 10 of the Act.
* The Government of Ontario, Canada.
* Participants or beneficiaries of funds or plans.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency:** The Central Board of Direct Taxes (CBDT) is responsible for overseeing the implementation and enforcement of this notification.
* **Timelines:** The notification specifies a timeframe for eligible investments (August 3, 2021 - March 31, 2024) and requires quarterly reporting in Form No. 10BBB within one month from the end of each quarter. Additionally, returns of income must be filed on or before the due date specified for furnishing the return of income under subsection 1 of section 139 of the Act.
* **Procedures:** "2726247 Ontario Inc." must adhere to the outlined conditions and reporting requirements to maintain eligibility for the tax exemption.
**8. Expected Outcomes / Impact of Changes:**
The intended outcome of this amendment is to attract investments from "2726247 Ontario Inc." into the Indian economy, potentially contributing to economic growth. By providing a tax exemption, the government aims to incentivize such investments while maintaining regulatory control through the stringent conditions outlined in the notification. A likely impact of these changes is increased scrutiny of "2726247 Ontario Inc.'s" investments and operations to ensure compliance with the specified conditions.
**9. Conclusion:**
Notification No. 84/2021 serves as a targeted amendment to the Income-tax Act, 1961, aimed at facilitating and regulating investments from a specific foreign pension fund, "2726247 Ontario Inc." The notification's significance lies in its potential to attract foreign investment while ensuring compliance with Indian tax laws and regulations. The strict conditions attached to the exemption highlight the government's focus on ensuring the integrity and proper utilization of such investments.
Key Entities Referenced
NEW DELHI: The city where the notification was issued.
Incometax Act, 1961: The primary legislation governing income tax in India, referred to as 'the Act'.
Central Government: The governing authority issuing the notification.
Ontario Inc.: An entity identified as a pension fund and referred to as 'the assessee'.
India: The country in which the eligible investment is made.
Official Gazette: The official publication in which the notification is published.
Form No. 10BBC: A certificate required to be furnished along with the return of income.
Income tax Rules, 1962: The rules governing income tax in India.
Form No. 10BBB: A form to intimate the details of investment made in India during the quarter.
Government of Ontario, Canada: The governing authority regulating the assessee.
Ministry of Finance: The ministry under which the Department of Revenue and Central Board of Direct Taxes operates.
Department of Revenue: The department under the Ministry of Finance responsible for revenue matters.
Central Board of Direct Taxes: The authority issuing the notification regarding income tax.
Canada: The country of origin of the Government of Ontario.
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
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असाधारण
EXTRAORDINARY
भाग II—खण्ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 2888] नई ददल्ली, मगं लिार, अगस्ट्त 3, 2021/श्रािण 12, 1943
No. 2888] NEW DELHI, TUESDAY, AUGUST 3, 2021/SHRAVANA 12, 1943
जित्त मत्रं ालय
(राजस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोड)ड
अजधसचू ना
नई ददल्ली, 03 अगस्ट्त, 2021
(आय-कर)
का.आ. 3114(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जजस े इसमें इसके पश्चात्
“अजधजनयम” कहा गया ह)ै के खंड (23चङ) के स्ट्पष्टीकरण 1 के खंड (ग) के उपखंड (iv) द्वारा प्रदत्त िजियों का प्रयोग करते
हुए, पेंिन जनजध अथाडत्, 2726247 ओंटाररयो इंक., (जजस े इसमें इसके पश्चात ् “जनधाडररती” कहा गया ह)ै को, उि खंड के
प्रयोजनों के जलए राजपत्र म ें इस अजधसूचना के प्रकािन की तारीख को या उसके पश्चात ् ककतु 31 माचड, 2024 को या उससे
पूिड भारत में उसके द्वारा दकए गए पात्र जिजनधान (जजस े इसमें इसके पश्चात् “उि जिजनधान” कहा गया ह)ै के संबंध में,
जनम्नजलजखत ितों को पूरा करने के अधीन रहते हुए, जिजनर्ददष्ट व्यजि के रूप में जिजनर्ददष्ट करती ह,ै अथाडत् :--
(i) जनधाडररती, उस तारीख से प्रारंभ होने िाली अिजध, जजसमें उि जिजनधान दकया गया ह,ै और उस तारीख को,
जजसको 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
जिजनर्ददष्ट दये तारीख को या उसस े पूिड आय की जििरणी फाइल करेगा ।
(ii) जनधाडररती ऐसी जििरणी के साथ जित्त िर्षड के दौरान, 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 धारा 288 की उपधारा (2) के नीच े
स्ट्पष्टीकरण में यथा पररभाजर्षत दकसी लेखपाल से प्ररूप सं 10खखग में एक प्रमाणपत्र प्रस्ट्तुत करेगा ।
4280 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(iii) जनधाडररती भारत में जतमाही के दौरान उसके द्वारा दकए गए प्रत्येक जिजनधान के संबंध में ब्यौरों की सूचना जतमाही
के दौरान 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 दगे ा;
(iv) जनधाडररती, ऐसे जिजनधानों के संबंध में, जो अजधजनयम की धारा 10 के खंड (23चङ) के अधीन छूट के जलए अर्हहत
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, यथास्जथजत, ऐसी जनजधयों या योजनाओं के भागीदारों या जहताजधकाररयों के जलए सेिाजनिृत्जत,
सामाजजक सुरक्षा, रोजगार, ददव्यांग्ता, मरणोत्तर प्रसुजिधाएं या कोई समरूप प्रजतकर का उपबंध करने के जलए
स्थाजपत एक या अजधक जनजधयों या योजनाओं की कानूनी बाध्यताओं और पररभाजर्षत अजभदायों को पूरा करने के
जलए आस्जतयों के प्रिासन या जिजनधान के जलए उत्तरदायी होगा;
(vii) जनधाडररती द्वारा जनदजे ित और जनिेजित पररसंपजत्तयों के कुल मूल्य का दस प्रजतित से अजधक नहीं खंड (vi) म ें
सूचीबद्ध उद्देश्य के अलािा प्रयोजनाथ ड अनुमेय बिते ऐसी पररसंपजत्तयााँ पूण ड रूप से प्रत्यक्ष या परोक्ष रूप से
ओंटाररयो, कनाडा सरकार के स्ट्िाजमत्ि मे हो और ऐसी पररसंपजत्तया ाँ जिधरन पर ओंटाररयो, कनाडा सरकार मे
जनजहत ह ै।
(viii) जनधाडररती के उपाजडनों और आजस्ट्तयों का उपयोग केिल कानूनी बाध्यताओं को और खंड (vi) में जनर्ददष्ट जनजधयों या
योजनाओं के सहभाजगयों या फायदाग्राजहयों के जलए पररभाजर्षत अजभदायों को पूरा करने के जलए दकया जाए तथा
पेंिन जनजध के उपाजडनों या आजस्ट्तयों का कोई भाग दकसी अन्य प्राइिेट व्यजि के दकसी फायदा को भारत में
जिजनधान करने के प्रयोजन से जभन्न प्रयोजनों के जलए जलए गए ऋण या उधार [अजधजनयम की धारा 10 के खडं
23चङ के स्ट्पष्टीकरण 2 के खंड (ii) के उपखंड (ख) में यथापररभाजर्षत] के जलए लेनदारों या जनक्षेपकताडओं को दकए
गए दकसी संदाय को िर्हजत करते हुए लाग ू नहीं होता ह;ै
(ix) खंड (vii) मे संदर्हभत आय तथा पररसंपजत्तयों का उपयोग खंड (viii) मे सूचीबद्ध उद्देश्य के अलािा प्रयोजनाथड दकया
जा सकता ह ै । बित े उि आय को या तो कनाडा सरकार के खात े मे जमा दकया जाए अथिा सरकार द्वारा नाजमत
दकसी अन्य खाते में, तादक अन्य जनजी व्यजि को आय का कोई भी भाग लाभाजन्ित न कर सके ।
(x) जनधाडररती के पास भारत म ें जिजनधान करने के प्रयोजनों 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 यथापररभाजर्षत] नहीं
होगा;
(xi) जनधाडररती जिजनधान प्राप्तकताड [अजधजनयम की धारा 10 खंड 23चङ) के स्ट्पष्टीकरण-2 के खंड (i) में
यथापररभाजर्षत] के ददन प्रजतददन की संदियाओं में भाग नहीं लेगा पंरत ु जिजनधान प्राप्तकता ड के पास जिजनधान की
संरक्षा करने के जलए मॉनीटरी तत्रं को, जजसमें जनदिे कों या कायडपालक जनदिे क को जनयुि करने के अजधकार
सजममजलत ह,ै जिजनधान प्राप्तकताड के ददन प्रजतददन की संदियाओं में भाग लेना नहीं समझा जाएगा ।
2. अजधजनयम की धारा 10 के खंड (23चङ) और इस अजधसूचना में यथा उजल्लजखत ितों में से दकसी भी ितड का उल्लंघन
जनधाडररती को कर छूट के जलए अपात्र ठहराएगा ।
3. यह अजधसूचना राजपत्र में उसके प्रकािन की तारीख से प्रिृत्त होगी ।
[अजधसूचना सं. 84/2021/फा.सं. 370142/13/2021-टीपीएल (भाग-1)]
जिपुल अग्रिाल, जनदिे क (कर नीजत और जिधान प्रभाग)[भाग II—खण् ड 3(ii)] भारत का राजपत्र : असाधारण 3
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 3rd August, 2021
(INCOME-TAX)
S.O. 3114(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 2726247 Ontario Inc.,
(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, 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 assesse
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 (viiii) 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;4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(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 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. 84/2021/ F. No. 370142/13/2021-TPL (Part- 1)]
VIPUL AGARWAL, Director (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.