Income deemed to accrue or arise in India - New Explanation 5A to the Section 9 - asset or capital asset being any share or interest in a company or entity registered or incorporated outside India - Existing explanation 5 not to apply in certain situations - Budget 2017-18 w.e.f. AY 2012-13 (Retrospective)

Finance Bill 2017: Amendment to Section 9 clarifies tax rules for Foreign Institutional Investors from April 1, 2012.

The Finance Bill, 2017 proposes an amendment to Section 9 of the Income-tax Act concerning income deemed to accrue or arise in India. It introduces Explanation 5A, clarifying that Explanation 5 does not apply to assets held by non-residents as investments in Foreign Institutional Investors registered under SEBI regulations. This amendment, effective retrospectively from April 1, 2012, pertains to assessment year 2012-2013 onwards. It aims to distinguish the tax treatment of shares or interests in foreign entities that derive substantial value from Indian assets, exempting certain foreign portfolio investments from being deemed as situated in India.