Loading...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Act Rules Income Tax
    Comparison of section 536 "Repeal and savings." between the Income-Tax Act, 2025 (as passed) and the...
    Act Rules Income Tax
    Comparison of section 524 "Presumption as to assets, books of account, etc." between the Income-Tax ...
    Act Rules Income Tax
    Comparison of section 515 "Appearance by authorised representative." between the Income-Tax Act, 202...
    Act Rules Income Tax
    Comparison of section 511 "Furnishing of report in respect of international group." between the Inco...
    Act Rules Income Tax
    Comparison of section 506 "Furnishing of information or documents by an Indian concern in certain ca...
    Act Rules Income Tax
    Comparison of section 505 "Submission of statement by a non-resident having liaison office." between...
    Act Rules Income Tax
    Comparison of section 500 "Provisional attachment to protect revenue in certain cases." between the ...
    Act Rules Income Tax
    Comparison of section 489 "Presumption as to assets, books of account, etc., in certain cases." betw...
    Act Rules Income Tax
    Comparison of section 488 "Offences by Hindu undivided family." between the Income-Tax Act, 2025 (as...
    Act Rules Income Tax
    Comparison of section 487 "Abetment of false return, etc." between the Income-Tax Act, 2025 (as pass...
    Act Rules Income Tax
    Comparison of section 484 "Abetment of false return, etc." between the Income-Tax Act, 2025 (as pass...
    Act Rules Income Tax
    Comparison of section 483 "Falsification of books of account or document, etc." between the Income-T...
    Act Rules Income Tax
    Comparison of section 479 "Failure to furnish returns of income." between the Income-Tax Act, 2025 (...
    Act Rules Income Tax
    Comparison of section 478 "Wilful attempt to evade tax, etc." between the Income-Tax Act, 2025 (as p...
    Act Rules Income Tax
    Comparison of section 476 "Failure to pay tax collected at source." between the Income-Tax Act, 2025...
    Act Rules Income Tax
    Comparison of section 476 "Failure to pay tax to credit of Central Government under Chapter XIX-B" b...
    Act Rules Income Tax
    Comparison of section 475 "Removal, concealment, transfer or delivery of property to prevent tax " b...
    Act Rules Income Tax
    Comparison of section 470 "Penalty not to be imposed in certain cases." between the Income-Tax Act, ...
    Act Rules Income Tax
    Comparison of section 469 "Power to reduce or waive penalty, etc., in certain cases." between the In...
    Act Rules Income Tax
    Comparison of section 465 "Penalty for failure to answer questions, sign statements, furnish informa...
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

Notes
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
Act Rules Income Tax
Show AI Summary
Savings on repeal preserve procedural and substantive continuity for matters tied to earlier tax years under the repealed regime.
The repeal provision preserves continuation of rights, obligations and proceedings relating to tax years beginning before the statutory cut-off by deeming prior actions, elections, penalties, refunds, recovery, carry-forwards of losses, credits and depreciation to remain effective and by allowing pending and certain later-initiated proceedings to be conducted under the repealed procedural rules; it invokes the General Clauses Act for repeal effect and specifies fallback mechanics for schemes where no corresponding provision exists in the new Act.
Act Rules Income Tax
Show AI Summary
Presumption of ownership and authenticity expands to electronic records, increasing evidentiary weight in tax proceedings.
The provision establishes rebuttable presumptions in proceedings under the Income tax enactment that items found in a search or survey-or delivered to a requisitioning officer-belong to the person in whose possession or control they are found and that books, documents, signatures and executions are true/authentic; the enacted text expressly extends those presumptions to electronic information and computer systems and adds a specific presumption that recorded electronic exchanges are exchanged between the purported parties.
Act Rules Income Tax
Show AI Summary
Authorised representative rules limit who may represent taxpayers, set disqualification grounds, and preserve appeal rights.
The provision permits an assessee to attend proceedings before income tax authorities and the Appellate Tribunal through an authorised representative drawn from an enumerated list, subject to written authorisation and exclusions; personal attendance is required where examination on oath or affirmation is mandated. The definition of authorised representative and of "accountant" contains specific exceptions to prevent conflicts of interest, while disqualification rules-based on dismissal from service, insolvency, specified convictions or prior penalties-apply with procedural safeguards including opportunity to be heard and a one month appeal to the Board. Several qualifications and categories are to be determined by subordinate prescription, and transitional cross references to prior statutes determine legacy practitioner recognition.
Act Rules Income Tax
Show AI Summary
Country-by-country reporting requires Indian resident entities to notify authorities and file consolidated international group reports.
Section 511 establishes a country by country reporting regime requiring Indian resident constituent entities with non resident parents to notify the prescribed income tax authority regarding designation as an alternate reporting entity and to provide parent/alternate details, while Indian resident parent or alternate reporting entities must furnish consolidated reports in the prescribed form and manner; fallback filing applies where foreign jurisdictions do not file or exchange reports or where a systemic failure is intimated, and exemptions apply if consolidated group revenue falls below a prescribed threshold.
Act Rules Income Tax
Show AI Summary
Information-furnishing obligation: Indian concerns must produce prescribed documents when foreign interests derive value from India assets.
An information-furnishing obligation requires an Indian concern to provide prescribed information or documents to the prescribed income-tax authority when a foreign company's or entity's shares or interests derive substantially their value from assets located in India and those assets are held, directly or indirectly, through the Indian concern; specific documents, the authority, the period and the manner of furnishing are to be specified by subordinate prescription.
Act Rules Income Tax
Show AI Summary
Reporting obligation for liaison offices: annual statement to tax authorities subject to deadlines and particulars as prescribed.
Non-residents with RBI/FEMA authorised liaison offices must annually prepare and deliver to the Assessing Officer a statement of the office's activities for the tax year in such form, containing such particulars and within such period as may be prescribed, with the deadline and particulars to be specified by subordinate legislation rather than fixed in the statute.
Act Rules Income Tax
Show AI Summary
Provisional attachment protects revenue during assessments, requiring competent authority approval and revocation on provision of bank guarantees.
Clause 500 permits an Assessing Officer, with prior Competent Authority approval and by written order, to provisionally attach property during assessment, reassessment of escaped income or specified penalty proceedings; attachment follows the statutory attachment procedure and valuation by a Valuation Officer. Attachment is revocable on furnishing a scheduled bank guarantee generally equal to fair market value (or a lower guarantee if accepted); guarantees may be invoked on default. Temporal limits apply (initial six months with limited extensions) and proceeds are adjusted against existing demands with balances deposited in designated accounts.
Act Rules Income Tax
Show AI Summary
Presumption as to assets extended to electronic information and computer systems when tendered as prosecutorial evidence.
The statute extends the evidentiary presumption applicable to assets, books of account and documents found in searches or taken into custody to include information in electronic form and computer systems, applying the presumptive framework when such items are tendered in evidence and qualifying that application by the phrase "so far as may be, apply"; the Act cross-references statutory definitions for electronic information and computer systems to ensure consistent meaning.
Act Rules Income Tax
Show AI Summary
Karta liability and member culpability: members can be prosecuted regardless of Karta's due diligence defence under the revised provision.
The provision deems the Karta guilty for offences committed by an HUF unless he proves absence of knowledge or that he exercised all due diligence; members are separately liable if the offence was committed with their consent or connivance or is attributable to their neglect, and the Act clarifies that such member liability applies irrespective of both the Karta's deemed guilt and his due-diligence defence.
Act Rules Income Tax
Show AI Summary
Corporate vicarious liability tightened: personal liability now operates notwithstanding due diligence where consent, connivance or neglect is shown.
Section 487 creates both a deeming rule treating companies and those in charge as guilty for corporate tax offences and a separate personal-liability route making directors, managers, secretaries, officers, partners and controlling members individually culpable where an offence is committed with their consent, connivance or attributable to their neglect; a statutory defence allows persons deemed guilty to avoid liability by proving lack of knowledge or that they exercised all due diligence, but the enacted text makes the personal-liability route operate irrespective of the deeming rule and the due diligence defence.
Act Rules Income Tax
Show AI Summary
Abetment of false return: two-tier custodial penalties and fine where tax impact determines higher or lower sentencing.
Abetment of false return criminalises abetting or inducing another to make a false tax-related account, statement or declaration where the abettor knows it is false or does not believe it to be true, and prescribes a two tier sentencing regime based on the monetary magnitude of tax, penalty or interest evaded or wilfully attempted to be evaded; textual differences between the Bill and the enacted section are limited to phrasing around liability to fine and an editorial sentence, with no observable change to imprisonment ranges or threshold.
Act Rules Income Tax
Show AI Summary
Falsification of books: criminalises willful false entries to enable another's tax evasion, allowing prosecution without proving actual evasion.
Section 483 proscribes falsification of books or other documents when a person wilfully makes or causes a false entry or statement, knowing it to be false or not believing it to be true, with intent to enable another to evade tax, interest or penalty; the offence carries rigorous imprisonment and fine, and it is not necessary to prove that the other person actually succeeded in evading tax.
Act Rules Income Tax
Show AI Summary
Failure to furnish tax returns: criminal penalties with tiered custody and limited safe harbour for late filing.
Criminal liability is imposed for wilful failure to furnish a required return of income, with a two-tiered custodial and fine regime linked to the amount of tax evaded. A limited bar to prosecution exists where the return is subsequently furnished within the procedural time references or, for non-companies, where the residual tax shortfall after qualifying payments falls below a de minimis threshold. The scope of the safe harbour depends on the timing rules in the cross referenced procedural subsection.
Act Rules Income Tax
Show AI Summary
Wilful attempt to evade tax: criminalises deliberate falsification and omissions, with tiered imprisonment and fines.
Section 478 criminalises a wilful attempt to evade tax and wilful under reporting by prescribing tiered rigorous imprisonment and fines, and it lists illustrative acts-false entries, omissions, possession of falsified books and conduct enabling evasion. The Act relocates and rephrases fine and penalty preservation language into a standalone non prejudice clause and tightens causation wording in an illustrative sub clause. Definitions of key terms and procedural or evidentiary standards are not provided in the text.
Act Rules Income Tax
Show AI Summary
Failure to remit tax collected at source criminalised, exposing collectors to imprisonment and fine; exception for timely remittance.
Failure to remit to Government the tax collected at source is a penal offence punishable by imprisonment and fine, targeting persons who collect tax at source and imposing personal liability for payment to Government credit. A narrow temporal exception excludes application where payment has been made on or before the time prescribed for filing the relevant statement, and the provision contains no mitigating grounds, mens rea gradation, or procedural compounding mechanisms.
Act Rules Income Tax
Show AI Summary
Failure to remit withheld tax attracts criminal liability including imprisonment and fine; safe harbour if credited before filing deadline.
Failure to remit taxes deducted under Chapter XIX-B or required by specified Notes to the Table in section 393 constitutes a criminal offence punishable by rigorous imprisonment and fine; the offence applies where a person fails to pay amounts to the credit of the Central Government, subject to a temporal safe harbour if payment is made or credited on or before the time prescribed for filing the relevant statement.
Act Rules Income Tax
Show AI Summary
Fraudulent disposition of property to frustrate tax execution now criminalised, tied specifically to a certificate drawn under section 413.
The offence criminalises anyone who fraudulently removes, conceals, transfers or delivers any property or interest therein with intent to prevent such property or interest from being taken in execution of a certificate drawn u/s 413; punishment is rigorous imprisonment up to two years and a fine. The enacted text replaces the Bill's broader "as prescribed" formulation with a direct reference to section 413, clarifying the instrument whose execution the offence seeks to frustrate. The clause contains no exceptions, definitions of "fraudulently," or evidentiary rules.
Act Rules Income Tax
Show AI Summary
Reasonable cause defence prevents penalties when a taxpayer proves it, expanding protection in the enacted provision.
Section 470 bars imposition of penalties under the listed provisions where a person or assessee proves there was reasonable cause for the failure; it frames the exception as prevailing irrespective of anything in those provisions and places the burden of proof on the person, while not defining "reasonable cause" or prescribing standards, procedures, or timing for such proof.
Act Rules Income Tax
Show AI Summary
Discretionary penalty waiver: voluntary pre-detection disclosure and cooperation enable administrative leniency, subject to prior approval thresholds and safeguards.
Section 469 empowers the Principal Commissioner or Commissioner to reduce or waive penalties under section 439 where there is voluntary, pre detection disclosure, good faith cooperation and payment or satisfactory arrangements for tax and interest; sub section (2) contains a deeming rule for "full and true disclosure." Prior approval from a specified senior authority is required where multi year income/disclosure crosses the statutory threshold or where aggregate penalties to be waived under the hardship route exceed the threshold; once discretionary relief is granted for a person no further relief is available for other tax years. Procedural safeguards and a twelve month disposal timeline apply.
Act Rules Income Tax
Show AI Summary
Tax penalties for procedural non-compliance impose fixed and daily monetary sanctions and designate imposing authorities by statute.
Clause 465 distinguishes fixed penalties for discrete refusals or omissions from continuing daily penalties for delays or failures to furnish returns, statements, certificates or allow inspections, caps certain penalties by reference to deductible or collectible tax, allocates specified income tax officers to impose such penalties, and defines "income tax authority"; it cross references multiple substantive provisions and contains no express procedural safeguards, appeal route, or mitigation mechanism.

TMI Notes

Back

All TMI Notes

Showing Results for :
Reset Filters
No Records Found

TMI Notes

Back

All TMI Notes

Comparison of SCHEDULE VI "INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF CERTAIN ELIGIBLE PERSONS IN INTERNATIONAL FINANCIAL SERVICES CENTRE OR HAVING INCOME THEREFROM" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

18 September, 2025

Contents
Acts
Rules & Regulations
Summary
Note

Note

-

Bookmark

Print

Print

SCHEDULE VI - INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF CERTAIN ELIGIBLE PERSONS IN INTERNATIONAL FINANCIAL SERVICES CENTRE OR HAVING INCOME THEREFROM

Income-tax Act, 2025

At a Glance

Schedule VI in the Income Tax Bill, 2025 (Old Version). It lists categories of income not to be included in total income of certain eligible persons connected with International Financial Services Centres (IFSCs). It matters to non-residents, IFSC units, specified funds, offshore banking units, portfolio managers and investors in such funds. 

Background & Scope

Statutory hook: Schedule VI is presented "See section 11" and is annexed to the Income Tax Bill, 2025 (Old Version). The Schedule identifies income heads and categories of eligible persons whose specified incomes "shall not be included" in total income, subject to conditions in Column D and definitions in accompanying Notes. The Schedule addresses income relating to transfers on recognised stock exchanges in IFSCs, transfers of securities, income from securitisation trusts, derivative transactions with IFSC participants, royalty/interest on lease of aircraft/ship, portfolio management receipts, capital gains on shares of domestic companies with IFSC units, specified fund returns, dividend receipts from IFSC units engaged in leasing, and interest payable by IFSC units. Definitions and clarificatory notes appear as Note 1 through Note 7 and specify terms such as "convertible foreign exchange," "investment division of offshore banking unit," "manager," "permanent establishment," "securities," "securitisation trust," "specified fund," "sponsor," "trust," and "units." The Schedule incorporates cross-references to other statutes and regulations including the Reserve Bank of India, Securities and Exchange Board of India Regulations, the International Financial Services Centres Authority Acts/Regulations and the Special Economic Zones Act.

Statutory Provision Mode

Text & Scope

Coverage: The Schedule is a table of 12 distinct items describing income types that are excluded from total income of defined eligible persons. Each row sets out (A) a description of income; (B) the eligible person; and (D) conditions for the exclusion. Core items include capital gains on transfers u/s 70(1)(r) on recognised IFSC exchanges (Sl.1), transfers of securities excluding shares of resident companies (Sl.2), income from non-resident issued securities (Sl.3), securitisation trust income (Sl.4), NDFs/ODIs/OTC derivatives transfers or distributions (Sl.5), royalty/interest on aircraft/ship leases (Sl.6), income from portfolios managed in IFSC contexts (Sl.7), capital gains on domestic company equity where the domestic company is an IFSC unit (Sl.8), income from specified funds (Sl.9), capital gains on transfer of shares of Indian resident companies linked to relocation to a resultant fund (Sl.10), dividends received by IFSC units engaged in leasing (Sl.11), and interest payable by IFSC units for borrowings on/after 1 September 2019 (Sl.12).

Interpretation

The Schedule operates as a negative inclusion clause-income of specified description shall not be included in total income when the conditions are satisfied. Legislative intent, as evidenced by cross-references and delegated prescription language, is to create tax neutrality or favourable tax treatment for financial activities routed through IFSCs and for specified funds and their non-resident unit-holders, subject to regulatory/formal conditions to prevent abuse. The repeated use of delegated-law phrasing ("as prescribed") indicates Parliament's intent to allow Central Government/Regulator-level granular conditions and computations to be specified by rules/regulations.

Exceptions/Provisos

Carve-outs: Many exclusions are conditional-e.g., Sl.1 requires consideration in convertible foreign exchange and that exemption be only to extent attributable to units held by non-residents or investment divisions of offshore banking units. Sl.3 requires that the income otherwise does not accrue or arise in India. Sl.6 requires that the paying IFSC unit has commenced operations on or before 31 March 2030. Sl.8 confines the capital gains exclusion to specified 10-year windows from commencement of operations (or from 1 April 2023 where applicable). Sl.10 requires transfer to a resultant fund via relocation and restricts the benefit to the extent attributable to units held by non-residents. Several notes set out detailed definitional provisos; for instance, "specified fund" requires Category III AIF registration or IFSC fund regulation and unit-holding restrictions (allowing a sponsor/manager unit and limited resident holdings up to 5% subject to conditions).

Illustrations

  • Fund A, a trust in an IFSC with all units held by non-residents, sells securities on a recognised IFSC exchange and receives convertible foreign exchange. The capital gains on the transfer may be excluded from total income of the specified fund subject to the computation rules (Not stated in the document: precise computation formula).
  • Non-resident investor receives distribution from an offshore derivative instrument entered into with an offshore banking unit in an IFSC. If the contract is with an offshore banking unit or an FPI unit of IFSC and conditions as prescribed are met, the income may be excluded from the non-resident's total income.
  • A domestic company that is an IFSC unit engaged primarily in aircraft leasing commences operations on 1 April 2024. Capital gains arising on transfer of its equity in a tax year within ten tax years may be excluded for an eligible non-resident or IFSC unit purchaser, subject to the stated conditions.

Interplay

The Schedule expressly references several external statutes and regulatory instruments: the Foreign Exchange Management Act, 1999 (for convertible foreign exchange), SEBI AIF Regulations, 2012, SEBI FPI Regulations, 2019, IFSC Authority (Fund Management) Regulations, 2022, IFSC Authority (Capital Market Intermediaries) Regulations, 2021, Special Economic Zones Act (for definition of Unit), and domestic Income-tax Act sections (section 70(1)(r), section 70(2), section 173(c), section 221(6)(d)). The Schedule anticipates delegated rules for computation and qualification ("as prescribed"), indicating reliance on subsequent notifications/circulars to operationalise conditions and valuation/computation methodologies. Specific cross-references (e.g., to section 147 for IFSC units) are used to tie tax treatment to statutory characterisation of IFSC entities.

Differences Between Documents

  • (Sl. No. 9) - Treatment of income from a specified fund or on transfer of units: Document 1 (Schedule VI of Income-tax Act, 2025) explicitly records the entry in Column D as "Nil." Document 2 (Income Tax Bill, 2025 - Old Version) leaves Column D blank (non-filled).
    • Practical impact: The Act version removes doubt by expressly providing nil conditions for the eligible person, which clarifies that no further conditions are required for that entry; the Bill's version could have generated uncertainty on whether any qualifying conditions applied.
  • Drafting and formulation differences - use of legislative phrasing: Document 1 consistently uses "as may be prescribed" in several conditions (e.g., Sl. No.1(c) "shall be computed in such manner as may be prescribed"), whereas Document 2 often uses the shorter "as prescribed" or "as notified" in similar places.
    • Practical impact: The Act version's "as may be prescribed" is the conventional indicative of delegated legislation; the Bill's shorter phrasing is substantively similar but the Act wording aligns with settled legislative drafting norms and can be interpreted as a clearer delegation to rulemaking authorities.
  • Definitions structure for "specified fund" (Note 1(g)): There are re-arrangements and slight reformulations. Document 2 presents sub-clauses (A) and (B) and then (C) and (D) (with (C) stating location and (D) the unit-holding exceptions). Document 1 embeds the location requirement as part of the initial description ("a fund ... located in International Financial Services Centres") and then sets out regulatory regimes (I) and (II) and other descriptive elements.
    • Practical impact: The Act text (Document 1) is more tightly structured to associate regulatory regime and location in a single sentence which aids interpretation that location in an IFSC is an essential attribute; the Bill's layout might have been read as fragmented and therefore more ambiguous regarding whether regulation or location were independent requirements.
  • Specific phrase differences in examples and notes: e.g., Document 2 uses "monies" in Note to Sl. No. 12 whereas Document 1 uses "moneys" (spelling variation); Document 1 cites the International Financial Services Centres Authority regulations (with years) similarly to Document 2 but sometimes presents the regulatory citation with slightly different punctuation and parenthetical years.
    • Practical impact: These are drafting-level differences with minimal substantive effect but the Act's editorial consistency reduces risk of citation ambiguity.
  • Scope of some clauses (Sl. No. 5 and related notes): Document 1 expressly includes "over-the-counter derivatives" in the heading of clause 5(b) and in certain cross references, and clarifies that qualifying counterparty may be "an offshore banking unit of an International Financial Services Centre as referred to in section 147 or any Foreign Portfolio Investor being a unit of an International Financial Services Centre." Document 2 contains a similar formulation but with slightly different punctuation and omission of the phrase "as referred to in section 147" in one place.
    • Practical impact: Document 1's explicit cross-reference to section 147 and consistent phraseology provides stronger statutory linkage to IFSC units, reducing interpretive friction when applying provisions to offshore banking units and FPIs.
  • Computational/technical wording: Document 1 uses "shall have the meanings respectively assigned to them in the Notes below the said Table" and similar phrasing; Document 2 has near identical phrasing but differs in capitalization and small syntactic points.
    • Practical impact: No substantive difference; primarily editorial and drafting refinement in the Act.

Practical Implications

  • Compliance and risk areas: Taxpayers and fund managers must ensure strict compliance with the unit-holding criteria for "specified funds" (non-resident majority with narrow resident exceptions) and with commencement-of-operations timelines (notably 31 March 2030). Failure to meet conditions will negate the exclusion. Reliance on delegated rules is necessary for computation-non-availability of notified rules would create compliance risk.
  • Record-keeping/evidence: The text implies the need to maintain documentary evidence of (i) convertible foreign exchange receipt, (ii) unit-holding registers showing resident/non-resident status and percentages, (iii) documentation of transfers on recognised IFSC stock exchanges, (iv) contracts with offshore banking units/FPIs for derivative transactions, (v) dates of commencement of operations for IFSC units, and (vi) particulars of relocation transfers between original and resultant funds. The Schedule itself does not prescribe specific documents-administrative rules likely will.

Key Takeaways

  • Schedule VI lists discrete income categories excluded from total income for specified IFSC-related actors, subject to conditions and definitions.
  • The exclusions primarily benefit non-residents, IFSC units, specified funds and their non-resident unit-holders to foster IFSC financial activity.
  • Many exclusions are conditional (convertible foreign exchange, unit-holding restrictions, commencement dates, 10-year windows), making eligibility fact-sensitive.
  • The Schedule relies on external regulations and delegated "prescribed" rules for computation and detailed conditions; absence of those rules may impede operational application.
  • Robust records proving non-resident status of unit-holders, transactional currency, dates of commencement and contractual counterparties will be central to claiming the exclusions.
  • Some drafting ambiguities in the Bill may have been clarified in subsequent Act drafting (e.g., explicit "Nil." for Sl.9 in the Act), underscoring the importance of checking final enacted text and notifications.

Full Text:

SCHEDULE VI - INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF CERTAIN ELIGIBLE PERSONS IN INTERNATIONAL FINANCIAL SERVICES CENTRE OR HAVING INCOME THEREFROM

Topics

Acts Income Tax