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August 19, 2020

Conditions to be satisfied by the pension fund clause (23FE) of section 10 of Income Tax

Conditions to be satisfied by the pension fund clause (23FE) of section 10 of Income Tax

Income-tax (20th Amendment) Rules, 2020

G.S.R. 508(E).—In exercise of the powers conferred by sub-clause (iii) of clause (c) of Explanation to the clause (23FE) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement.—(1) These rules may be called the Income-tax (20th Amendment) Rules, 2020.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962,-

(i) after rule 2DA, the following rules shall be inserted, namely: –

“2DB. Other conditions to be satisfied by the pension fund. – For the purposes of clause (23FE) of section 10, the pension fund shall be required to satisfy the following other conditions, namely: –

(i) it is regulated under the law of a foreign country including the laws made by any of its political constituents being a province, state or local body, by whatever name called, under which it is created or established, as the case may be;

(ii) it is 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;

(iii) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (ii) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;

(iv) it does not undertake any commercial activity whether within or outside India;

(v) it 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;

(vi) it shall file return of income on or before the  due  date  specified  under  sub-section  (1) of  section 139 and 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.

2DC. Guidelines for notification under clause (23FE) of section 10.- (1) For the purposes of notification under sub-clause (iv) of clause (c) of Explanation to the clause (23FE) of section 10, the pension fund shall make an application in Form No. 10BBA enclosing therewith relevant  documents and evidence, to the,-

(i) Member (Legislation), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi during the financial year 2020-2021;

(ii) Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division during the other financial years.

(2) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall lay down the data structure, standards and procedure of furnishing and verification of Form No 10BBB and Form No 10BBC, and shall be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said forms so furnished under this sub-rule.”;

(ii) in Appendix-II, after Form No. 10BB, the following forms shall be inserted, namely: –

“Form No. 10BBA

[See sub-rule (1) of rule 2DC]

Application for notification under sub-clause (iv) of clause (c) of Explanation to the clause (23FE) of section 10 of the Income-tax Act, 1961

(Pension Fund)

To,

The Member (Legislation), CBDT (For application during Financial Year 2020-2021)**/

The Member (Having control over the Foreign Tax and Tax Research Division) (For application

during other financial year)**

Madam/ Sir,

The applicant is a Pension Fund and interested in making investment in terms of clause (23FE) of section 10 of the Income-tax Act, 1961 and therefore, it is requested that necessary notification may kindly be issued, the details for which are as under:

(a) Name of the Pension Fund                                              :

(b) Address of the Pension Fund                              :

(c) Tax Identification Number of the country of residence :

(d) Country of residence                                           :

(e) Permanent Account Number (PAN)                 :

2. It is hereby certified that-

(a) the Pension Fund is created or established under the law of_________(please mention the name of the foreign country including any of its political constituents like province/ state/ local body etc) and is regulated under that law;

  (b) is not liable to tax in the foreign country mentioned at (a) above;

(c) the Pension Fund is responsible for administering or investing the assets for meeting the statutorily 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;

(d) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in (c) above and no portion of the earnings or assets of the pension fund inures any benefit to any other private person; and

(e) the pension fund does not undertake any commercial activity whether within or outside India.

3. In support of the claims made above, the following documents are attached:

(a) documents constituting the Pension Fund and any later amendment thereto, and

(b) any other relevant document or information.

Verification*

I,____________________________________________,  son/daughter/ wife** of  Shri _________________________, solemnly declare that to the best of my knowledge and belief, the information given in this application and the annexures and documents, if any, accompanying it are correct and complete and particulars shown therein are truly stated.

2. I further declare that to the best of my knowledge; I have not concealed any fact or information which could be relevant for this application.

3. I also declare that I am making this application in my capacity as_________________(designation) and that I am holding PAN/ Aadhaar** and I am competent to make this application and verify it.

Verified today the____________________day of___________________________

Place________________                   

Notes: 1. **Delete whichever is not applicable.

(Signature)______________

Name_______________          

2. *To be signed by the person competent to verify the return of income under section 140 of the Income- tax Act, 1961.

Form No 10BBB*

[See rule 2DB]

Intimation by Pension Fund of investment under clause (23FE) of section 10 of the Income-tax Act, 1961

(within one month from the end of the quarter ending on 30th June, 30th September, 31st December and    31st March of the financial year)

To,

The Assessing Officer

_______________________

_______________________

Madam/ Sir,

Kindly find  statement  containing details  of  investment  for  the quarter ending_______of the Financial Year______________in respect of_________________(Name of the Pension Fund) having PAN______________and notified under clause (23FE) of section 10 of the Income-tax Act, 1961 vide notification no___________, dated________________(DDMMYYYY) as under:

 *Details of the entity in which Investment made

Sl. No.DateAmountNature [Debt/ Share Capital (Equity/ Preference)/ Unit]Rate of Dividend, if any, (Preference Share/ Unit)/ Interest (Debt)*Business Trust/ Company or enterprise or entity/ Alternative Investment Fund*Name*PAN
(1)(2)(3)(4)(5)(6)(7)(8)
1.       
2.       
Total       

Verification*

I,__________________,  son/   daughter/   wife** of  Shri______________, solemnly declare that to the best of my knowledge and belief, the information given above is correct and complete and particulars shown therein are truly stated.

2. I further declare that to the best of my knowledge; I have not concealed any relevant fact or information.

3. I  also declare that I am making this application in my capacity as______________(designation) and that I am holding PAN/ Aadhaar** and I am competent to make this application and verify it.

Verified today the________________day of___________________ 

Place_________________                   

Notes: 1. **Delete whichever is not applicable.

(Signature)______________

Name___________________        

  • *To be signed by the person competent to verify the return of income under section 140 of the Income- tax Act, 1961.

Form No 10BBC

[See rule 2DB]

Certificate of accountant in respect of compliance to the provisions of clause (23FE) of section 10 of the Income-tax Act, 1961 by the notified Pension Fund

I/ We* hereby confirm that I/ we* have examined the relevant accounts, documents and records of_________________________________ (name of      the Pension Fund) having PAN_____________________and   which  has  been  notified   under   clause   (23FE)   of  section   10 vide notification no_______________ dated ______________(DDMMYYYY), for the         period from_____________(DDMMYYYY) to_________________(DDMMYYYY) and after examination, it is hereby certified that:

(i) the opening balance (i.e. the closing balance as on the last date of the preceding financial year) of the investment made which is eligible for exemption under clause (23FE) of section 10 is____________ (in rupees) and details of the investment by the Pension Fund during the period are as under:

*Details of the entity in which Investment made

Sl. NoDateAmountNature [Debt/ Share Capital (Equity/ Preference)/ Unit]Rate of Dividend, if any, (Preference Share/ Unit)/ Interest (Debt)*Business Trust/ Company or enterprise or entity/ Alternative Investment Fund*Name*PAN
(1)(2)(3)(4)(5)(6)(7)(8)
1.       
2.       
        
Total       

(i) *the pension fund has not sold any of the investments made for the purposes of exemption under clause (23FE) of section 10 of the Income-tax Act, 1961 before the expiry of three years from the date on which the investment was made in respect of the said exemption/the pension fund has  sold certain investments made for the purposes of exemption under clause (23FE) of section 10 of

the Income-tax Act, 1961 before the expiry of three years from the date on which the investment was made in respect of the said exemption, the details of which are as under:

*Details of the entity in which Investment made

Sl. No.Date of investmentAmountNature [Debt/ Share Capital (Equity/ Preference)/ Unit]Rate of Dividend, if any,  (Preference Share/ Unit)/ Interest (Debt)*Business Trust/ Company or enterprise or entity/ Alternative Investment Fund*Name*PAN*Date of sale
(1)(2)(3)(4)(5)(6)(7)(8)(9)
1.        
2.        
         
Total        

(i) the Pension Fund satisfies all the conditions required for the purposes of exemption under clause (23FE) of section 10 of the Income-tax Act, 1961, that is, –

(a) it is created or established under the law of___________(please mention the name of the foreign country including any of its political constituents like province/ state/ local body etc) and is regulated under that law;

(b) it is not liable to tax in such foreign country;

(c) it is responsible for administering or investing the assets for meeting the statutorily 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;

(d) its earnings and assets are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in at clause (ii) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;

(e) it does not undertake any commercial activity whether within or outside India; and

(f) it has complied with the requirement of intimation of the details of investment made by it in India in Form No 10BBB.

Verification

1. It has been ensured that the information furnished is true and correct in all respects and no relevant information has been concealed or withheld.

2. Neither I, nor any of my partners, is a director, partner or an employee of the above-mentioned entities or its associated concerns.

3. I/ we* fully understand that any statement made in this certificate, if proved incorrect or false, will render me/us* liable for any penal or other consequences as may be prescribed in law or is otherwise warranted.

Verified today the______________day of______________

 Place_____________          

(Signature and Stamp/ Seal of the Signatory)

Accountant____________                                   

Name of the Signatory ________                             

  Membership No. ___________                     

Full Address______________                                

Notes: 1. *Delete whichever is not applicable.

2. This certificate is to be given by an accountant as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961.”.

[Notification No. 67/2020/ F. No. 370142/28/2020-TPL] NEHA SAHAY, Under Secy. (Tax Policy and Legislation Division)

Note : The principal rules were published in the Gazette of India Extraordinary, Part III, Section 3, Sub-section (ii), vide notification number S.O. 969(E), dated the 26th March, 1962 and last amended vide notification number G.S.R. No. 499(E) dated the 10th August, 2020.

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