## Policy Analysis Report: S.O. 3867(E) - Income Tax Exemption for Specified Pension Funds
**1. Executive Summary:**
This report analyzes Notification S.O. 3867(E), issued by the Ministry of Finance (Department of Revenue) on August 17, 2022, concerning income tax exemptions for specified pension funds investing in India. The notification specifies CPPIB India Private Holdings Inc. as an eligible entity for exemption under Section 10(23FE) of the Income-tax Act, 1961, subject to certain conditions. The core purpose is to encourage foreign investment in India by pension funds by providing tax benefits, contingent upon compliance with reporting and regulatory requirements. The key finding is the detailed articulation of conditions for maintaining eligibility for the tax exemption, focusing on transparency, regulatory compliance, and restriction on participation in the day-to-day operations of investee companies.
**2. Introduction:**
The purpose of this report is to provide an informative analysis of Notification S.O. 3867(E) regarding income tax exemptions for specified pension funds, based solely on the information provided in the policy text. This report aims to clarify the policy's objectives, key provisions, and potential implications for affected stakeholders, specifically focusing on CPPIB India Private Holdings Inc.
**3. Policy Overview:**
This is a *new policy* specifying conditions for a particular entity to benefit from an existing provision in the Income-tax Act.
* **Core Objective(s):** The core objective, as inferred from the text, is to specify CPPIB India Private Holdings Inc. as eligible for income tax exemption under Section 10(23FE) of the Income-tax Act, 1961, *and* to establish the conditions it must meet to maintain that eligibility. This encourages investment by the specified fund while ensuring compliance and responsible investment practices.
**4. Background and Rationale:**
As a *new policy* specifying a particular entity, the underlying problem this notification addresses is the need to clarify and operationalize the existing provisions of Section 10(23FE) of the Income-tax Act, 1961. By specifying CPPIB India Private Holdings Inc. as a "specified person" and outlining the conditions for exemption, the government provides certainty and predictability for this investor. This likely encourages further foreign investment into India.
**5. Key Provisions / Changes:**
This is a *new policy specifying a particular entity*
* **Specification of Pension Fund:** CPPIB India Private Holdings Inc. (PAN: AAICC2378J) is specified as the eligible pension fund (referred to as "the assessee").
* **Investment Eligibility Period:** Eligible investments are those made in India on or after August 17, 2022 (date of publication) and on or before March 31, 2024.
* **Conditions for Exemption:** The assessee must fulfill the following conditions:
* File return of income for all relevant previous years within the specified timeframe.
* Furnish a certificate in Form No. 10BBC from an accountant, complying with Rule 2DB(vi) of the Income-tax Rules, 1962.
* Intimate details of each investment in India within one month from the end of the quarter in Form No. 10BBB, complying with Rule 2DB(v) of the Income-tax Rules, 1962.
* Maintain a segmented account of income and expenditure for eligible investments.
* Continue to be regulated under the law of the Government of Canada.
* Administer or invest assets for statutory obligations and defined contributions of retirement, social security, employment, disability, death benefits, or similar plans.
* Use earnings and assets solely for meeting statutory obligations and defined contributions, with no benefit inuring to any other private person (except for loan repayments for purposes other than investment in India).
* Not have loans or borrowings for making investments in India.
* Not participate in the day-to-day operations of investee companies, though monitoring mechanisms are allowed.
* **Violation Clause:** Violation of the conditions specified in Section 10(23FE) and this notification will render the assessee ineligible for the tax exemption.
**6. Target Audience and Stakeholders:**
The primary target audience is **CPPIB India Private Holdings Inc.** Other stakeholders include:
* **The Central Board of Direct Taxes (CBDT)**: The responsible agency for implementing and overseeing the policy.
* **Accountants and Auditors:** Responsible for providing the certificate in Form No. 10BBC.
* **Investee Companies:** Companies receiving investment from CPPIB India Private Holdings Inc.
* **Government of Canada**: The assessee shall continue to be regulated under the law of the Government of Canada
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is the responsible body, as indicated by the notification's origin.
* **Timelines:**
* Investment Period: August 17, 2022, to March 31, 2024.
* Reporting: Quarterly reporting of investment details within one month of the quarter's end (Form No. 10BBB).
* Annual Reporting: Filing of income tax return and Form No. 10BBC as per existing income tax regulations.
* **Procedures:** The notification specifies the forms and reporting requirements that CPPIB India Private Holdings Inc. must follow to maintain its eligibility for the tax exemption. These procedures are aligned with existing provisions in the Income-tax Act, 1961 and Income-tax Rules, 1962.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* **Increased Foreign Investment:** By clarifying the eligibility for tax exemption, the policy aims to encourage CPPIB India Private Holdings Inc. to invest more in India.
* **Compliance and Transparency:** The conditions attached to the exemption ensure that the investment is made responsibly and transparently.
* **Economic Growth:** Increased investment from pension funds can contribute to economic growth and development in India.
* **Retirement Security:** indirectly, this can impact positively the beneficiaries of funds or plans established for providing retirement, social security.
**9. Conclusion:**
Notification S.O. 3867(E) specifies CPPIB India Private Holdings Inc. as an eligible entity for income tax exemption under Section 10(23FE) of the Income-tax Act, 1961, subject to fulfilling specific conditions. This policy aims to attract foreign investment from pension funds while ensuring transparency, regulatory compliance, and responsible investment practices. This policy is significant because it clarifies the application of existing tax laws to a specific foreign pension fund, potentially paving the way for similar specifications in the future and contributing to increased foreign investment in India.
Key Entities Referenced
NEW DELHI: Capital of India; place of publication of the notification.
Incometax Act, 1961: A law referred to in the notification, specifically section 10 and clause 23FE.
Central Board of Direct Taxes: The issuing authority of the notification under the Ministry of Finance, Department of Revenue.
CPPIB India Private Holdings Inc.: The pension fund being specified as a specified person for the purposes of clause 23FE of section 10 of the Income-tax Act, 1961.
Government of Canada: The country under whose law the assessee (CPPIB India Private Holdings Inc.) should continue to be regulated.
Incometax Rules, 1962: Rules related to the Income-tax Act, 1961, specifically rule 2DB.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-17082022-238148
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CG-DL-E-17082022-238148
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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.ं 3693] नई दिल्ली, बुधिार, अगस्ट्त 17, 2022/श्रािण 26, 1944
No. 3693] NEW DELHI, WEDNESDAY, AUGUST 17, 2022/SHRAVANA 26, 1944
जित्त मत्रं ालय
(रािस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
अजधसचू ना
नई दिल्ली, 17 अगस्ट्त, 2022
(आय-कर)
का.आ. 3867(अ).—केंद्रीय सरकार, आय-कर अजधजनयम, 1961 (1961 का 43) (जिस े इसमें 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,् सीपीपीआईबी इंजडया प्राईिेट होलल्डंग्स इंक (पैन: एएआईसीसी2378ि)े , (जिस े
इसम ें इसके पश्चात जनधाडररती कहा गया ह)ै को, उि खडं के प्रयोिनों के जलए रािपत्र में इस अजधसूचना के प्रकािन की
तारीख को या उसके पश्चात ककंतु 31 माच,ड 2024 को या उससे पूिड भारत में उसके द्वारा दकए गए पात्र जिजनधान (जिस े
इसम ें इसके पश्चात उि जिजनधान कहा गया ह)ै के सम्बंध में, जनम्नजलजखत ितों को परू ा करने के अधीन रहते हुए,
जिजनर्िष्टड व्यजि के रूप में जिजनर्िष्टड करती ह,ै अर्ाडत्: -
(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;
(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
5549 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
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 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 अप्रत्यक्षतः 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 तु 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 10के खडं (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.ं 97/2022/फा. स.ं 500/पीएफ2/एस10(23चड.)/एफटी और टीआर-II-भाग(3)]
श्री ित्स सेहरा, अिर सजचि
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 17th August, 2022
(INCOME-TAX)
S.O. 3867(E).—In exercise of the 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, CPPIB India Private
Holdings Inc. (PAN: AAICC2378J), (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 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 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. 97/2022/F. No. 500/PF2/S10(23FE)/FT&TR-II-Part(3)]
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.