CBDT Notifies Persons Exempt from Provisions Related to ‘Angel Tax’

Notification No. 29/2023, dated 24-05-2023

The Finance Act 2023 has enhanced the scope of section 56(2)(viib) to make it applicable to share application money/premium received from any person, regardless of residential status. Further, Proviso to section 56(2)(viib) gives power to the Central Government to notify class or classes of persons to whome the provisions of said section shall not apply.
In the exercise of the power, the CBDT has notified the following class or classes of persons:

1) The Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies, including entities controlled by the Government or where direct or indirect ownership of the Government is 75% or more;

2) Banks or Entities involved in Insurance Business where such entity is subject to applicable regulations in the country where it is established or incorporated or is a resident;

3) Any of the following entities, which is a resident of any country or specified territory, and such entity is subject to applicable regulations in the country where it is established or incorporated or is a resident:

a. Entities registered with SEBI as Category-I Foreign Portfolio Investors;

b. Endowment funds associated with a university, hospitals or charities;

c. Pension funds created or established under the law of the foreign country or specified territory;

d. Broad-Based Pooled Investment Vehicle or fund where the number of investors in such vehicle or fund is more than 50, and such fund is not a hedge fund or a fund which employs diverse or complex trading strategies

The board has notified 21 Countries/Specified Territories for the purpose of point (3).

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