Clarification on Tax Rules for Non-Resident Investors in Category I & II AIFs u/s 115UB of Income-tax Act.
The circular clarifies the taxability of income earned by non-resident investors from offshore investments routed through investment funds, specifically Category I or II Alternative Investment Funds (AIFs) regulated by SEBI or IFSCA. The Finance Act 2023 amended the definition of "investment fund" under the Income-tax Act, 1961, to include references to IFSCA regulations. Section 115UB of the Act governs the tax liability of such funds and their investors. The circular updates the previous guidance from 2019, maintaining all other content unchanged, and instructs its wide circulation for stakeholder awareness.
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