Supplementary FAQs for the Finance Bill, 2025
The Supplementary FAQs for the Finance Bill, 2025 provide clarifications on key amendments proposed in the bill, particularly regarding income tax provisions. These FAQs aim to enhance understanding of changes related to tax exemptions, investment fund regulations, and compliance measures. Key areas covered include modifications to Section 9A (investment fund conditions), new presumptive taxation under Section 44BBD, tax exemptions for IFSC insurance policies, and updated definitions for capital assets and specified funds. The document helps taxpayers and businesses navigate the proposed tax framework effectively.
FAQ.1: Amendment of Section 9A of the Income-tax Act, 1961
Q.1. At present what are conditions for participation or investment in the corpus of eligible investment fund by persons resident in India, as per section 9A of the Incometax Act, 1961?
Ans. At present, section 9A(3)(c) of the Income-tax Act, 1961 inter alia provides that the aggregate participation or investment by a person resident in India, in the eligible investment fund, directly or indirectly, shall not exceed five percent of the corpus of such fund.
Q.2. What amendment has been proposed through Government Amendment?
Ans. In the Government Amendment, it has been proposed that the indirect participation or investment by a person resident in India, in the eligible investment fund, shall not be considered for the five percent condition in section 9A. Hence, the requirement of monitoring and determining participation and investment by a person resident in India, where such participation and investment is made indirectly, shall no longer be required. This shall reduce compliance burden and enable relocation of fund managers of offshore funds.
Q.3. What are the provisions of section 9A(8A) of the Income-tax Act, 1961?
Ans. Section 9A(8A) inter alia provides that the Central Government may relax or modify any one or more of the 13 conditions specified in section 9A(3) for eligible investment fund and 4 conditions in section 9A(4) for eligible fund manager, if such fund manager is located in an IFSC.
Q.4. What changes have been proposed in section 9A(8A) of the Income-tax Act, 1961?
Ans. In the Finance Bill, 2025, it was proposed that the conditions specified in section 9A(3)(c) shall not be modified by the Central Government, as the condition was proposed for relaxation in the Income-tax Act, 1961 itself. In the proposed Government Amendment, the said power of the Central Government has been restored, so that the condition specified in section 9A(3)(c) may also be modified and relaxed, if required.
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