Comparison of Section 208 "Tax on income from units purchased in foreign currency or capital gains arising from their transfer." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....nsfer." It prescribes special tax treatment for "overseas financial organisations" investing in specified Indian units. The provision affects offshore funds and, indirectly, specified mutual funds and public financial institutions. Effective date or enactment timing: Not stated in the document. Background & Scope Statutory hooks: Clause 208 is located in the Bill under the heading "Special provisions relating to non-residents and foreign company." It provides a targeted tax regime for an "overseas financial organisation" (Offshore Fund) that invests in India under arrangements with specified Indian entities and with SEBI approval. The clause covers income received in respect of units purchased in foreign currency, long-term capital gains ....

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....l/segregated tax treatment for certain categories of income of Offshore Funds rather than taxing the whole global income under general rates. The table reflects source-specific rates (10% and 12.5%) and contemplates residual income taxed under ordinary provisions. The language in paragraph (1) as drafted in the Bill treats the column C entries as amounts payable; given those are percentages, interpretation requires reading them as rates. The clause also attempts to ring-fence specified incomes for limited deduction access, suggesting a legislative intent to limit deduction claims against the preferred categories. Legislative intent beyond the text: Not stated in the document. Exceptions/Provisos Paragraph (2) provides the principal except....

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....3(1)(a)/(e), Chapter VIII (deductions), sections 26-61, and the Companies Act definition for "public financial institution" (section 2(72)). It also references Schedule VII entries for identifying eligible mutual funds and requires SEBI approval for the arrangement. No implementing Rules, Notifications, or Circulars are cited in the Bill text provided. Where interaction with other tax provisions or double taxation treaties may arise: Not stated in the document. Differences Between Section 208 of the Income-tax Act, 2025 and Clause 208 of the Income Tax Bill, 2025 - (Old Version) and Practical Impact The two texts are substantially similar in structure and substantive content. Key textual differences and their practical impact are as follo....

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....l phrasing said "shall be the aggregate of the amount specified in column C thereof." * Practical impact: The Act wording better describes rate application (rate x income); the Bill wording could be read as implying fixed amounts in column C. However, because column C contains percentage figures, the Act wording reduces ambiguity. The documents do not state any consequential computational rules beyond the table. Practical Implications * Compliance and risk areas grounded in the clause: Offshore Funds must establish that (i) the investment arrangement is with an eligible public sector bank, public financial institution or specified mutual fund; and (ii) the arrangement has SEBI approval. The clause conditions preferential tax treatment ....