## Policy Analysis Report: Income-tax Notification S.O. 5080(E)
**1. Executive Summary:**
This report analyzes Notification S.O. 5080(E), issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes on October 31, 2022. This notification specifies the Teacher Retirement System of Texas (TRS) as a "specified person" under clause 23FE of section 10 of the Income-tax Act, 1961, allowing for potential tax exemption on eligible investments made in India. The notification outlines conditions for maintaining this "specified person" status, including compliance with reporting requirements, investment restrictions, and operational limitations. Key findings indicate a targeted effort to attract pension fund investments into India while ensuring regulatory oversight and preventing misuse of the exemption.
**2. Introduction:**
The purpose of this report is to provide a comprehensive analysis of the Income-tax Notification S.O. 5080(E), based solely on the information contained within the provided policy text. This analysis will cover the policy's objective, key provisions, target audience, inferred implementation aspects, and expected outcomes.
**3. Policy Overview:**
This is a *new* policy specifying an entity as eligible for tax exemption under existing law, rather than an amendment.
* **Core Objective(s):** As inferred from the text, the core objective is to facilitate foreign investment into India by specifically identifying the Teacher Retirement System of Texas as eligible for tax exemptions under section 10(23FE) of the Income-tax Act, 1961, subject to certain conditions.
**4. Background and Rationale:**
As a new policy granting specified status, the policy likely addresses the broader issue of attracting foreign investment into India, specifically from pension funds. By granting this specific tax exemption and defining the conditions under which it can be maintained, the policy aims to encourage investment while ensuring transparency and adherence to Indian tax laws. The text also suggests a need to prevent potential abuse of tax exemptions by setting operational boundaries and reporting requirements.
**5. Key Provisions / Changes:**
This is a *new* policy granting specified status so all provisions outlined within the text are key.
The notification establishes the following key provisions:
* **Designation:** The Teacher Retirement System of Texas (TRS), with PAN AAATT9387R, is designated as a "specified person" for the purposes of section 10(23FE) of the Income-tax Act, 1961.
* **Eligible Investment Period:** The eligible investments must be made on or after the date of publication of the notification (October 31, 2022) and on or before March 31, 2024.
* **Conditions for Exemption:** The TRS must fulfill the following conditions to maintain eligibility for the tax exemption:
* File income tax returns for all relevant years within the period of investment, adhering to the deadlines specified under section 139(1) of the Act.
* Furnish a certificate in Form No. 10BBC, certified by an accountant as defined in section 288(2) of the Act, demonstrating compliance with section 10(23FE) during the financial year, as per Rule 2DB(vi) of the Income-tax Rules, 1962.
* Report details of each investment made in India during the quarter in Form No. 10BBB within one month from the end of the quarter, as per Rule 2DB(v) of the Income-tax Rules, 1962.
* Maintain a segmented account of income and expenditure for investments qualifying for exemption under section 10(23FE).
* Remain regulated under the laws of the State of Texas or the federal laws of the United States of America.
* Administer or invest assets to meet the statutory obligations and defined contributions of retirement, social security, or similar benefit plans.
* Use earnings and assets only for meeting statutory obligations and defined contributions for participants or beneficiaries, ensuring no benefit inures to any private person, except for legitimate payments to creditors or depositors.
* Refrain from having loans or borrowings (as defined in Explanation 2(ii)(b) of section 10(23FE)) for making investments in India.
* Not participate in the day-to-day operations of the investee, although monitoring investments and appointing directors is permitted.
* **Violation Clause:** Violation of any conditions stipulated in section 10(23FE) of the Act or this notification will render the TRS ineligible for the tax exemption.
* **Effective Date:** The notification is effective from the date of its publication in the Official Gazette.
**6. Target Audience and Stakeholders:**
Based on the text, the primary target audience is the Teacher Retirement System of Texas (TRS). Secondary stakeholders include the Indian Ministry of Finance, the Central Board of Direct Taxes, accountants responsible for issuing Form 10BBC certificates, and the companies in India receiving investments from the TRS (investees). Other affected parties are participants and beneficiaries of funds managed by TRS
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is responsible for implementing and overseeing compliance with this notification. The Ministry of Finance, Department of Revenue, is the issuing authority.
* **Timelines and Procedures:** The notification specifies the following timelines and procedures:
* Investments must be made between October 31, 2022, and March 31, 2024.
* Income tax returns must be filed according to section 139(1) of the Income-tax Act.
* Form 10BBC must be furnished with the return.
* Form 10BBB must be submitted within one month from the end of each quarter.
* Segmented accounts must be maintained.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* Increased foreign investment into India from the Teacher Retirement System of Texas.
* Enhanced transparency and accountability in the utilization of tax exemptions.
* Stimulation of economic activity and growth in India through foreign capital infusion.
* Compliance with Indian tax laws and regulations by the foreign investor.
* Support for retirement and social security plans for participants and beneficiaries of funds managed by TRS
**9. Conclusion:**
Notification S.O. 5080(E) is a targeted policy designed to attract foreign investment from the Teacher Retirement System of Texas by offering tax exemptions under specific conditions. The policy establishes clear guidelines and reporting requirements to ensure compliance and prevent potential abuse. Its significance lies in its potential to stimulate economic growth in India through increased foreign capital inflow while maintaining regulatory oversight. This policy is a tool for the Indian government to boost foreign direct investment by offering tax incentives under controlled circumstances.
Key Entities Referenced
NEW DELHI: Location of publication as stated in the document.
Incometax Act, 1961: A law referred to in the notification, specifically section 10 and clause 23FE.
Central Board of Direct Taxes: A department under the Ministry of Finance.
Ministry of Finance: The government ministry issuing the notification.
Teacher Retirement System of Texas: A pension fund specified as the assessee in the notification. PAN: AAATT9387R
India: The country where the eligible investment is being made.
Form No. 10BBC: A certificate to be furnished along with the return of income as per the provisions of clause 23FE of section 10 of the Income-tax Act, 1961.
Incometax Rules, 1962: Rules pertaining to the Incometax Act, 1961, specifically rule 2DB.
Form No. 10BBB: A form to intimate details in respect of each investment made in India during the quarter.
Government of the State of Texas: The governing body of the State of Texas
United States of America: Country which laws regulate the assessee.
Mayapuri, New Delhi: Location where the document was uploaded for printing.
Delhi: Location of the Controller of Publications.
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-31102022-239954
xxxGIDHxxx
CG-DL-E-31102022-239954
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ऄसाधारण
EXTRAORDINARY
भाग II—खण् ड 3—ईप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 4861] नइ ददल्ली, सोमिार, ऄक्त बू र 31, 2022/कार्ततक 9, 1944
No. 4861] NEW DELHI, MONDAY, OCTOBER 31, 2022/KARTIKA 9, 1944
जित्त मत्रं ालय
(राजस्ट्ि जिभाग)
(केंद्रीय प्रत्यक्ष कर बोडड)
ऄजधसचू ना
नइ ददल्ली, 31 ऄक्त ूबर, 2022
(अय-कर)
का.अ. 5080(ऄ).—केंद्रीय सरकार, अय-कर ऄजधजनयम, 1961 (1961 का 43) (जजसे आसमें आसके पश्चात
ऄजधजनयम कहा गया ह)ै की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण 1 के खंड (ग) के ईपखडं (iv) द्वारा प्रदत्त िजियों का
प्रयोग करते हुए, पेंिन जनजध ऄथाडत,् टीचर ररटायरमेंट जसस्ट्टम ऑफ टेक्सास (पैन: एएएटीटी9387अर), (जजसे आसमें
आसके पश्चात जनधाडररती कहा गया ह)ै को, ईि खंड के प्रयोजनों के जलए राजपत्र में आस ऄजधसूचना के प्रकािन की तारीख
को या ईसके पश्चात ककत ु 31 माचड, 2024 को या ईससे पूि ड भारत म ें ईसके द्वारा दकए गए पात्र जिजनधान (जजसे आसम ें
आसके पश्चात ईि जिजनधान कहा गया ह)ै के सम्बंध म,ें जनम्नजलजखत ितों को पूरा करन े के ऄधीन रहते हुए, जिजनर्ददष्ट
व्यजि के रूप म ेंजिजनर्ददष्ट करती है, ऄथाडत:् -
(i) जनधाडररती, ईस तारीख से प्रारम्भ होन े िाली ऄिजध, जजसमें ईि जिजनधान दकया गया ह ैऔर ईस तारीख को,
जजसको ऐसा जिजनधान का पररसमापन दकया गया ह,ै समाप्त होन े िाली ऄिजध के ऄंतगतड अन े िाल े सभी
सुसंगत पूिडिती िर्षों के जलए ऄजधजनयम की धारा 139 की ईपधारा (1) के ऄधीन अय की जििरणी प्रस्ट्तुत
करने की जिजनर्ददष्ट देय तारीख को या ईससे पूिड अय की जििरणी फाआल करेगा;
(ii) जनधाडररती ऐसी जििरणी के साथ जित्त िर्षड के दररान ऄजधजनयम की धारा 10 के खंड (23चड.) के ईपबधं ों की
ऄनुपालन के संबंध में अय-कर जनयम, 1962 के जनयम 2घख के खडं (vi) के ईपबंधों के ऄनसु ार ऄजधजनयम
7244 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
की धारा 288 की ईपधारा (2) के नीचे स्ट्पष्टीकरण म ें यथा पररभाजर्षत दकसी लेखापाल के प्ररूप सख्ं या
10खखग म ें एक प्रमाण पत्र प्रस्ट्तुत करेगा;
(iii) जनधाडररती भारत म ें जतमाही के दररान ईसके द्वारा दकए गए प्रत्येक जिजनधान के संबंध में ब्यररों की सूचना
जतमाही के दररान जतमाही के ऄतं से एक मास के भीतर अय-कर जनयम, 1962 के जनयम 2घख के खंड (V) के
ईपबंधों के ऄनुसार प्ररूप स.ं 10खखख में देगा;
(iv) जनधाडररती, ऐसे जिजनधानों के संबंध म,ें जो ऄजधजनयम की धारा 10 के खंड (23चड.) के ऄधीन छूट के जलए
ऄर्तहत ह,ैं के संबंध में अय और व्यय का खंडिार लेखा बनाए रखेगा;
(v) जनधाडररती टेक्सास राज्य की सरकार के कानूनों, या संयुि राज्य ऄमेररका की सरकार के सघं ीय कानूनों, या
दोनों के कानूनों के ऄधीन जिजनयजमत होता रहगे ा;
(vi) जनधाडररती, यथाजस्ट्थजत, ऐसी जनजधयों या योजनाओं के भागीदारों या जहताजधकाररयों के जलए सेिाजनिृजत्त,
सामाजजक सुरक्षा, रोजगार, ददव्यांग्ता, मरणोत्तर प्रसुजिधाएं या कोइ समरूप प्रजतकर का ईपबंध करने के
जलए स्ट्थाजपत एक या ऄजधक जनजधयों या योजनाओं की काननू ी बाध्यताओं और पररभाजर्षत ऄजभदायों को पूरा
करने के जलए अजस्ट्तयों के प्रिासन या जिजनधान के जलए ईत्तरदायी होगा;
(vii) जनधाडररती के ईपाजडनों और अजस्ट्तयों का ईपयोग केिल कानूनी बाध्यताओं को और खंड (vi) में जनर्ददष्ट
जनजधयों या योजनाओं के सहभाजगयों या फायदाग्राजहयों के जलए पररभाजर्षत ऄजभदायों को पूरा करन े के जलए
दकया जाए तथा पेंिन जनजध के ईपाजडनों या अजस्ट्तयों का कोइ भाग दकसी ऄन्य प्राआिेट व्यजि के दकसी
फायदा को भारत में जिजनधान करने के प्रयोजन से जभ्न प्रयोजनों हते ु जलए गए णण या ईधार अऄजधनयम की
धारा 10 के खडं (23चड.) के स्ट्पष्टीकरण 2 के खडं (ii) के ईपखंड (ख) में यथापररभाजर्षत] के जलए लने दारों या
जनक्षेपकताडओं को दकए गए दकसी संदाय को िर्तजत करत े हुए लाग ूनहीं होता ह;ै
(viii) जनधाडररती के पास भारत म ें जिजनधान करन े के प्रयोजनों के जलए, प्रत्यक्षत: या ऄप्रत्यक्षतः कोइ णण या ईधार
अऄजधनयम की धारा 10 के खंड (23चड.) के स्ट्पष्टीकरण-2 के खंड (ii) के ईपखंड (ख) म ें यथापररभाजर्षत] नहीं
होगा; और
(ix) जनधाडररती जिजनधान प्राप्तकता ड अऄजधनयम की धारा 10 के खंड (23चड.) 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 तंत्र को, जजसमें जनदेिकों या कायडपालक जनदेिक को जनयुि करने के
ऄजधकार सजम्मजलत ह,ै जिजनधान प्राप्तकताड के ददन प्रजतददन की संदियाओं में भाग लेना नहीं समझा जाएगा।
2. ऄजधजनयम की धारा 10के खंड (23चड.) और आस ऄजधसूचना में यथाईजल्लजखत ितों में से दकसी भी ितड का
ईल्लघं न जनधाडररती को कर छूट के जलए ऄपात्र ठहराएगा।
3. यह ऄजधसूचना राजपत्र में ईसके प्रकािन की तारीख से प्रिृत्त होगी।
[ऄजधसूचना सं. 119/2022/फा. स.ं 500/पीएफ4/एस10(23चड.)/एफटी और टीअर-II(2)]
ऄपूिड जतिारी, ऄिर सजचि
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 31st October, 2022
(INCOME-TAX)
S.O. 5080(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, Teacher Retirement
System of Texas (PAN: AAATT9387R), (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[भाग II—खण् ड 3(ii)] भारत का राजपत्र : ऄसाधारण 3
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:-
(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 laws of the Government of the State of
Texas, or the federal laws of the Government of the United States of America, or both;
(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. 119/2022/F. No. 500/PF4/S10(23FE)/FT&TR-II(2)]
APOORV TIWARI, 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.