CBDT issued Notification No. 16/2020 dated 05.03.2020 to notify securities transfer of which shall not be regarded as transfer for the purpose of computing capital gains under section 47 of the Income Tax Act, 1961.
The power to notify the securities is conferred in section 47(viiab)(d) of the Income Tax Act, 1961. The said clause (d) was amended by the Finance (No. 2) Act, 2019 as a tax incentive measure to International Financial Services Centre (IFSC).
In order to promote the development of world class financial infrastructure in India, some tax concessions have already been provided in respect of business carried on from an IFSC.
To further promote such development and bring these IFSC at par with similar IFSC in other countries, certain additional benefits were provided by the Finance (No. 2) Act, 2019 one of which was related to section 47.
Under the existing provisions of the section 47(viiab) of the Act, any transfer of a capital asset, being bonds or Global Depository Receipts or rupee denominated bond of an Indian company or derivative, made by a non-resident through a recognised stock exchange located in any IFSC and where the consideration for such transaction is paid or payable in foreign currency shall not be regarded as transfer.
It was provided to widen the types of securities listed in said clause by empowering the Central Government to notify other securities for the purposes of this clause.
It is provided that transfer, at a recognised stock exchange located in any International Financial Services Centre, of such other securities as may be notified by the Central Government in this behalf, shall not be regarded as a transfer in the hands of a non-resident.
This amendment was made effective from 1st April, 2020 or assessment year 2020-21.
This amendment was made effective from 1st April, 2020 or assessment year 2020-21.
Read the full text of the Notification
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th March, 2020
INCOME-TAX
S.O. 986(E).—In exercise of the powers conferred by sub-clause (d) of clause (viiab) of section 47 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the following securities for the purposes of the said sub-clause, namely:-
(i) foreign currency denominated bond;
(ii) unit of a Mutual Fund;
(iii) unit of a business trust;
(iv) foreign currency denominated equity share of a company;
(v) unit of Alternative Investment Fund,
which are listed on a recognised stock exchange located in any International Financial Services Centre in accordance with the regulations made by the Securities and Exchange Board of India under the Securities and Exchange Board of India Act 1992 (15 of 1992) or the International Financial Services Centres Authority under the International Financial Services Centres Authority Act 2019 (50 of 2019), as the case may be.
Explanation.- For the purposes of this notification,─
(a) “Mutual Fund” means a Mutual Fund specified under clause (23D) of section 10 of the Income-tax Act, 1961.
(b) “Alternative Investment Fund” shall have the meaning assigned to it in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
2. This notification shall come into force with effect from 1st April 2020.
[Notification No. 16/2020, F.No.370142/22/2019-TPL]
GUDRUN NEHAR, Director (Tax Policy & Legislation)
Download Copy of the Notification No. 16/20 dated 05.03.2020.
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