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CBDT allows Recognised Provident Fund Trusts to Invest in Lower A-rated Instruments

cbdt-allows-recognised-provident-fund-trusts-to-invest-in-lower-a-rated-instruments

CBDT vide Notification No. 84/2020 dated 22.10.2020 and through Income-tax (23rd Amendment) Rules, 2020 has amended Rule 67 of the Income Tax Rules, 1962 and allows Recognised Provident Fund Trusts to invest in lower A-rated instruments from minimum AA-rated instruments.


Rule 67 prescribes an investment pattern for recognised provident funds which is required to be followed for availing tax exemption.


In the said notification, ‘AA’ has been substituted by ‘A’ in three provisos of Rule 67(2) of the Income Tax Rules, 1962. Thus, CBDT has reduced the minimum rating from ‘AA’ to ‘A’. 


Prior to this amendment, such Trusts were not allowed to invest in A-rated instruments since A-rated instruments are considered riskier compared to ‘AA’ rated instruments or securities. The amendment allows investment in securities with a single rating of ‘A’ or above by a domestic or an international rating agency.


Read the full text of the Notification No. 84/2020 dated 22.10.2020 on investments in A-rated securities by RPF Trusts



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