CBDT vide Notification No. 28/2022 dated 06.04.2022 in G.S.R. 275(E) through Income-tax (8th Amendment) Rules, 2022 amends Income-tax Rules, 1962 to enable Infrastructure Debt Fund Non-Banking Finance Companies to issue zero-coupon bonds as provided under clause (48) of section 2 of the Income-tax Act, 1961 (‘Act’).
Section 10(47) of the Act exempts income of an infrastructure debt fund set up in accordance with the prescribed guidelines. The guidelines for setting up an Infrastructure Debt Fund for the purpose of exemption under clause (47) of section 10 of the Act are prescribed in Rule 2F of the Income-tax Rules, 1962 (‘Rules’).
Further, Rule 8B of the Rules prescribes the guidelines for notification of zero-coupon bond. An application for notifying the bonds shall be made in Form No. 5B. Further, a certificate of a Chartered Accountant is also required in Form No. 5BA.
Section 2(48) of the Act defines a zero-coupon bond to mean-
(i) a bond issued by any -
infrastructure capital company or
infrastructure capital fund or
infrastructure debt fund or
public sector company or
scheduled bank
(ii) in respect of which no payment and benefit is received or receivable before maturity or redemption and
(iii) which is notified by the Central Government.
Rule 2F(3) of the Rules allows an Infrastructure Debt Fund to issue rupee-denominated bonds or foreign currency bonds as per RBI directions or regulations under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000.
Now the CBDT has amended sub-rule (3) of Rule 2F to allow Infrastructure Debt Fund to issue ‘Zero-Coupon Bonds’ also. The consequential amendment has also been made in Rule 8B.
The new rules have also substituted Form No. 5B and Form No. 5BA. The application in Form No. 5B referred to in sub-rule (1) of Rule 8B and the certificate of accountant in Form 5BA referred to in sub-rule (6) of Rule 8B shall be furnished electronically either under digital signature or electronic verification code.
Read the full text of CBDT Notification No. 28/2022 dated 6th April, 2022 on Zero-coupon bonds to be issued by an Infrastructure Debt Fund
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 6th April, 2022
INCOME-TAX
G.S.R. 275(E).—In exercise of the powers conferred by clause (48) of section 2 and clause (47) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement.- (1) These rules may be called the Income-tax (8th Amendment) Rules, 2022.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), in rule 2F, for sub-rule (3) and (4), the following sub-rules shall be substituted, namely:─
“(3) The Infrastructure Debt Fund shall issue,-
(i) rupee denominated bonds or foreign currency bonds in accordance with the directions of Reserve Bank of India and the relevant regulations under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time; or
(ii) zero coupon bonds in accordance with rule 8B.
(4) The terms and conditions of a bond issued by the Infrastructure Debt Fund, ─
(i) under clause (i) of sub-rule (3) shall be in accordance with the directions of the Reserve Bank of India and the regulations referred to in the said clause ; or
(ii) under clause (ii) of sub-rule (3) shall be in accordance with rule 8B.”.
3. In the principal rules, in rule 8B, ─
(a) in sub-rule (1),-
(i) for the words “infrastructure capital fund”, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;
(ii) for the proviso, the following provisos shall be substituted, namely:-
“Provided that an application shall not be made for notification of a bond which is to be issued beyond a period of two financial years following the financial year in which such application is made:
Provided further that an application made in Form No. 5B shall be disposed of within a period of six months from the date of receipt of such application.”;
(b) in sub-rule (2), for clause (i), the following clause shall be substituted, namely:-
“(i) where the application is made by any infrastructure capital company or infrastructure debt fund or a public sector company, being a Government company defined under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013), a copy of certificate of incorporation under the Companies Act, 2013 (18 of 2013).”;
(c) in sub-rule (3),-
(i) for the words “infrastructure capital fund” wherever they occur, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;
(ii) after clause (v), the following clause shall be inserted, namely:-
“(vi) where the application is made by an infrastructure debt fund, such fund shall along with the application, submit an undertaking that a sinking fund shall be maintained for the interest which will accrue on all the zero coupon bonds subscribed and such interest shall be invested in Government security as defined under clause (f) of section 2 of the Government Securities Act, 2006 (38 of 2006).”;
(d) in sub-rule (5) for the words “infrastructure capital fund”, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;
(e) for sub-rule (6), the following sub-rule shall be substituted, namely-
“(6) Every infrastructure capital company or infrastructure capital fund or infrastructure debt fund or public sector company shall submit within two months from the end of each financial year referred to in sub-clause (i) or sub-clause (ii) of clause (iv) of sub-rule (3), or, as the case may be, in sub-clause (i) or sub-clause (ii) of clause (v) of sub-rule (3), a certificate from an accountant as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year in Form No. 5BA.”;
(f) Explanation below sub-rule (7) shall be omitted;
(g) after sub-rule (7) the following shall be inserted, namely:─
“(8) The application in Form No. 5B referred to in sub-rule (1) and the certificate of accountant in Form 5BA referred to in sub-rule (6) shall be furnished electronically either under digital signature or electronic verification code.
(9) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing of Form No. 5B and Form No. 5BA.
Explanation.- For the purposes of this rule, the expressions,-
(i) “discount” and “period of life of the bond” shall have the same meanings respectively assigned to them in clause (i) and clause (ii) of the Explanation to clause (iiia) of subsection (1) of section 36;
(ii) "electronic verification code" means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems);
(iii) "infrastructure debt fund" shall mean the infrastructure debt fund notified by the Central Government in the Official Gazette under clause (47) of section 10 of the Act.”.
4. In the principal rules, in Appendix II, for Form No 5B, the following Forms shall be substituted, namely:─
“FORM NO. 5B
[See sub-rule (1) rule 8B]
Application for notification of a zero coupon bond under clause (48) of section 2 of the Income-tax Act, 1961
…
…
Form No. 5BA
(See sub-rule (6) of rule 8B)
Certificate of an accountant under sub-rule (6) of rule 8B
…
…
[Notification No. 28/2022/F. No. 370142/4/2022-TPL]
NEHA SAHAY, Under Secy.
Note : The principal rules were published in the Gazette of India Extraordinary, Part III, section 3, subsection (ii), vide notification number S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification number G.S.R. 274 (E) dated the 5th April, 2022.
Download CBDT Notification No. 28/2022 dated 6th April, 2022 on Zero-coupon bonds to be issued by an Infrastructure Debt Fund in pdf format
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