Income-Tax (Thirteenth Amendment) Rules, 2023: CBDT Introduces New Sub-rule For Movable Property Exchange
Bhavya Singh
22 July 2023 6:30 AM GMT
The Central Board of Direct Taxes (CBDT), Ministry of Finance, has issued Notification No. 51/2023-Income Tax on July 18, 2023, amending Rule 11UAC of the Income-tax Rules, 1962. This new amendment is known as the Income-tax (Thirteenth Amendment) Rules, 2023 and comes into effect immediately. Under the Income-tax (Thirteenth Amendment) Rules 2023, a significant addition has been made...
The Central Board of Direct Taxes (CBDT), Ministry of Finance, has issued Notification No. 51/2023-Income Tax on July 18, 2023, amending Rule 11UAC of the Income-tax Rules, 1962. This new amendment is known as the Income-tax (Thirteenth Amendment) Rules, 2023 and comes into effect immediately.
Under the Income-tax (Thirteenth Amendment) Rules 2023, a significant addition has been made in the form of a new sub-rule inserted in rule 11UAC. This sub-rule is applicable to movable property, such as shares or units, received by the fund management entity of the resultant fund during relocation. It specifies that this exchange of movable property is in lieu of shares or units held by the investment manager entity in the original fund.
The sub-rule lays out specific conditions that must be met for this exchange to take place:
1. Not less than ninety percent of shares or units or interest in the fund management entity of the resultant fund must be held by the same entity(ies) or person(s) in the same proportion as held by them in the investment manager entity of the original fund.
2. Not less than ninety per cent of the aggregate of shares or units or interest in the investment manager entity of the original fund should have been held by such entity(ies) or person(s).
For the purpose of understanding the sub-rule, certain definitions have been provided:
i. "Relocation," "original fund," and "resultant fund" hold the meanings as assigned to them in the Explanation to clause (viiac) and clause (viiad) of section 47 of the Income-tax Act, 1961.
ii. "Fund management entity" refers to the same meaning as provided in the sub-clause (p) of regulation 2 of the International Financial Services Centres Authority (Fund Management) Regulations, 2022.
iii. "Investment manager entity" is defined as the fund manager of the original fund regulated by the respective regulation of the jurisdiction in which the original fund is located.
This amendment was made by the CBDT in exercise of the powers conferred by clause (XI) of the proviso to clause (x) of subsection (2) of section 56 read with section 295 of the Income-tax Act, 1961 (43 of 1961).
Notification No. 51/2023 [F. No. 370142/22/2023-TPL] / GSR 519(E)
Date: 18/07/2023
