CBDT Notifies ‘Units of Investment Trust & EFTs of IFSC’ for Sec. 47(viiab) Exemption

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Units of Investment Trust & EFTs of IFSC

Notification No. 71/2023, dated 12-09-2023

Section 47(viiab) of the Income-tax Act provides that any transfer of capital assets by a non-resident on a recognised stock exchange located in any IFSC is not treated as transfer provided the consideration is paid or payable in foreign currency. The section list down the following capital asset for the purpose of exemption:

  • Bonds or GDRs as referred to in Section 115AC(1);
  • Rupee Denominated Bond of an Indian company; and
  • Derivative.

Section 47(viiab) also empowers the Central Government to notify securities eligible for the benefit. Exercising power, the Central Board of Direct Taxes (CBDT) vide notification SO 986(E) dated 05-03-2020, notifying the following securities for section 47(viiab):

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; and

v. Unit of Alternative Investment Fund.

vi. Bullion Depository Receipt with underlying bullion

Now, the board has amended its earlier notification to include the following securities within the scope of exemption:

a) Unit of investment trust;

b) Unit of a scheme;

c) Unit of Exchange Traded Fund launched under International Financial Services Centres

Authority (Fund Management) Regulations, 2022.

Click Here To Read The Full Notification

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