Presence of Eligible Fund Manager in India not to constitute Business Connection in India – Section 9A

Section 9A allows foreign funds to use Indian managers without creating tax residence or business connection

Section 9A provides that fund management activities by an eligible fund manager in India do not create business connection for eligible investment funds established outside India. The fund is not considered Indian resident merely because its manager operates from India. Eligible investment funds must meet specific conditions including non-Indian residency, treaty country residence, maximum 5% Indian participation in corpus, minimum 25 unconnected members, corpus restrictions, and regulatory compliance. From April 2025, Indian participation is measured on specific dates with grace periods. Eligible fund managers must be independent, registered professionals operating in ordinary business course with limited profit entitlement. Funds must file annual statements within 90 days, with penalties of Rs. 5 lakh for non-compliance. Special relaxations apply for funds managed from International Financial Services Centres and certain government or sovereign funds. The provision facilitates foreign fund operations through Indian managers without triggering Indian tax residence.