The 2025 Budget outlines measures to boost investment and employment, particularly focusing on the International Financial Services Centre (IFSC). Key provisions include extending tax incentives for IFSC units until March 2030 and offering exemptions on life insurance policies and capital gains related to ship leasing, aligning them with aircraft leasing. The definition of ‘dividend’ has been rationalized to support treasury centers, ensuring that certain intra-group loans and advances are not treated as dividends. Additionally, a simplified regime for IFSC-based fund managers is introduced, enhancing their competitiveness with global peers. The amendments also extend the deadline for several provisions, including the operation commencement dates for IFSC units and fund managers, aiming to stimulate growth. Moreover, tax relief is offered for specific ship leasing units and the scope of long-term capital gains is adjusted to promote foreign investment. These changes are set to take effect from April 1, 2025, further solidifying IFSC as a key player in global finance and contributing to the nation’s economic growth.
Budget 2025 –MEASURES TO PROMOTE INVESTMENT AND EMPLOYMENT
I. Incentives to International Financial Services Centre
International Financial Services Centre (IFSC) is a jurisdiction that provides financial services to non-residents and residents, to the extent permissible under the current regulations, in any currency except Indian Rupee. In order to promote the development of world-class financial infrastructure in India, several tax concessions have been provided to units located in IFSC, under the Act, over the past few years.
In order to further incentivize operations from IFSC, it is proposed to make the following amendments:-
II. Extension of sunset dates for several tax concessions pertaining to IFSC
The sunset dates for commencement of operations of IFSC units for several tax concessions, or relocation of funds to IFSC, in clause (d) of sub-section (2) of section 80LA, clause (4D), clause (4F), clause (4H) of section 10 and clause (viiad) of section 47, is proposed to be extended to 31st day of March, 2030.
2. These amendments will take effect from the 1st day of April, 2025.
[Clauses 6, 13 & 19]
III. Exemption on life insurance policy from IFSC Insurance offices
Clause (10D) of section 10 provides exemption to sum received under a life insurance policy including the sum allocated by way of bonus on such policy, subject to the conditions specified therein. The said provisions are also applicable to insurance policies issued by IFSC Insurance Offices.
2. Provisos (fourth, fifth, sixth and seventh provisos) to the said clause, inter alia, provide that the exemption under the said clause is not available if annual amount of premium or aggregate of premiums payable is above Rs. 2.5 lakhs for unit linked insurance policies, and Rs. 5 lakhs for life insurance policies other than unit linked insurance policies.
3. In order to provide parity to non-residents availing life insurance from insurance office in IFSC vis a vis other foreign jurisdiction, it is proposed to amend the clause (10D) of section 10 so as to provide that proceeds received on life insurance policy issued by IFSC insurance intermediary office shall be exempted without the condition related to the maximum premium payable on such policy as mentioned above.
4. These amendments will take effect from the 1st day of April, 2025.
[Clause 6]
IV. Exemption to capital gains and dividend for ship leasing units in IFSC
Clause (4H) of section 10 provides exemption to non-residents or unit of IFSC engaged in aircraft leasing on capital gains tax on transfer of equity shares of domestic companies being units of IFSC, engaged in aircraft leasing. Further, clause (34B) of section 10 provides exemption to dividend paid by a company being a unit of IFSC engaged in aircraft leasing, to a unit of IFSC engaged in aircraft leasing.
2. It has been represented that similar to aircraft leasing business, in the ship leasing business, separate special purpose vehicles (SPVs) are created for one or more vessels to safeguard the investors. Therefore, on the lines of aircraft leasing, it is proposed to extend the exemption in,–
(I) Clause (4H) of section 10 to non-residents or units of IFSC engaged in ship leasing on capital gains tax on transfer of equity shares of domestic companies being units of IFSC, engaged in ship leasing.
(II) Clause (34B) of section 10 to dividend paid by a company being a unit of IFSC engaged in ship leasing, to a unit of IFSC engaged in ship leasing.
3. These amendments will take effect from the 1st day of April, 2025.
[Clause 6]
V. Rationalisation of definition of ‘dividend’ for treasury centres in IFSC
Sub-clause (e) of clause (22) of section 2, inter alia, provides that dividend includes any sum by way of advance or loan to a shareholder paid by a company (not being a company in which the public are substantially interested), where shareholder is the beneficial owner of shares holding not less than 10% of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits.
2. Sub-clause (ii) of clause (22) of section 2 excludes from the definition of dividend (may be referred to as deemed dividend) any advance or loan made to a shareholder or the said concern by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company.
3. Suggestions have been received that borrowings by the corporate treasury centre in IFSC from any group entities could trigger deemed dividend provisions in the hands of the shareholder.
4. It is proposed to amend clause (22) of section 2 to provide that any advance or loan between two group entities, where one of the group entity is a “Finance company” or a “Finance unit” in IFSC set up as a global or regional corporate treasury centre for undertaking treasury activities or treasury services and the ‘parent entity’ or ‘principal entity’ of such ‘group entity’ is listed on stock exchange in a country or territory outside India, other than the country or territory outside India as may be specified by the Board in this behalf, shall not be treated as ‘dividend’. The conditions for a ‘group entity’, ‘principle entity’ and the ‘parent entity’ shall be prescribed.
5. These amendments will take effect from the 1st day of April, 2025.
[Clause 3]
VI. Simplified regime for fund managers based in IFSC
Section 9A inter alia provides that the fund management activity carried out through an eligible fund manager acting on behalf of eligible investment fund shall not constitute business connection in India, subject to the conditions mentioned therein.
2. One of the conditions at clause (c) of sub-section (3) of section 9A inter alia provides that the eligible investment fund shall fulfil the condition that the aggregate participation or investment in the fund, directly or indirectly, by persons resident in India does not exceed five per cent of the corpus of the fund.
3. Sub-section (8A) of section 9A inter alia provides that the Central Government may by notification specify that any one or more of the conditions specified in sub-section (3) or sub-section (4), shall not apply or shall apply with such modifications, in case of an eligible investment fund and its eligible fund manager, if such fund manager is located in an IFSC and has commenced its operations on or before the 31st day of March, 2024.
4. It has been represented that there a need to provide a specific simplified regime for IFSC based fund managers, managing funds situated in other jurisdiction so that fund managers in IFSC are at par with the fund management entities in competing foreign jurisdiction.
5. It is proposed to amend the provisions of section 9A so that –
(I) The condition at clause (c) of sub-section (3) of section 9A is rationalised for all the eligible investment funds whether or not their eligible fund managers are based in IFSC, by determining the aggregate participation or investment in the fund as on the 1st day of April and the 1st day of October of the previous year and in case the said condition at clause (c) is not satisfied on either of the said days, it shall be provided that it will satisfy the same condition within four months of the said days;
(II) In view of the rationalisation above, the condition at clause (c) of sub-section (3) of section 9A shall not be modified for any eligible investment fund and its eligible fund manager; and
(III) The other conditions (a) to (m) can be relaxed for a eligible investment fund where the date of commencement of operations by its eligible fund manager located in IFSC for the purposes of sub-section (8A) of section 9A is on or before 31st day of March, 2030.
6. These amendments will take effect from the 1st day of April, 2025.
[Clause 5]
VII. Amendment of Section 10 related to Exempt income of Non-Residents
The existing provisions of clause (4E) of section 10 of the Act provide that any income accrued or arisen to, or received by a non-resident on account of transfer of non-deliverable forward contracts or offshore derivative instruments or over the-counter derivatives, or distribution of income on offshore derivative instruments entered into with an offshore banking unit of an International Financial Services Centre referred to in sub-section (1A) of section 80LA shall not be included in the total income of the non-resident.
2. In order to further incentivize operations from the IFSC, it is proposed to amend clause (4E) of section 10 to provide that the income of a non-resident on account of transfer of non-deliverable forward contracts or offshore derivative instruments or over the-counter derivatives, or distribution of income on offshore derivative instruments, entered into with Foreign Portfolio Investors being an IFSC unit shall also not be included in the total income subject to certain conditions as may be prescribed.
3. This amendment will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the assessment year 2026-27 and subsequent assessment years.
[Clause 6]
VIII. Inclusion of retail schemes and Exchange Traded Funds (ETFs) in the existing relocation regime of funds of IFSCA
In order to further incentivize operations from IFSC, it is proposed to make the following amendments:
(I) The existing provisions of clause (viiad) of Section 47 of the Act provide that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund shall not be regarded as transfer for the purposes of calculating capital gains. The Explanation to the clause inter-alia, provides that “resultant fund” means a fund established or incorporated in India, which has been granted a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund, is located in any International Financial Services Centre and is subject to certain conditions provided therein. Thus, the relocation of original funds to the resultant fund in the IFSC is a tax-neutral transaction.
(II) The income of retail schemes and Exchange Traded Funds (ETFs) located in the IFSC and, inter alia, is regulated under the International Financial Services Centres Authority Act, 2019 was granted exemption along with previously exempted specified funds as per section 10(4D) of the Act vide the Finance (No.2) Act, 2024. It is proposed to include such retail schemes or Exchange Traded Funds (ETF) within the definition of resultant fund for the purposes of clause (viiad) of section 47 of the Act so that relocation of original funds to such funds in the IFSC is also a tax-neutral transaction.
2. This amendment will take effect from the 1st day of April, 2026, and shall accordingly, apply in relation to the assessment year 2026-27 and subsequent assessment years.
[Clause 13]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 6 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.
It is proposed to amend clause (aa) of Explanation to clause (4D) of the said section so as to extend the date of commencement of operations specified therein from 31st March, 2025 to 31st March, 2030.
This amendment will take effect from 1st April, 2025.
Clause (4E) of the said section provides that in computing the total income of a previous year of any person, any income accrued or arisen to, or received by a non-resident as a result of transfer of non-deliverable forward contracts or offshore derivative instruments or over the-counter derivatives, or distribution of income on offshore derivative instruments, entered into with an offshore banking unit of an International Financial Services Centre referred to in sub-section (1A) of section 80LA, and fulfilling the conditions as may be provided by rules, shall not be included.
It is proposed to amend the said clause to insert “or any Foreign Portfolio Investor being a unit of an International Financial Services Centre” so as to bring it within the ambit of the said clause.
It is further proposed to insert an Explanation to the said clause to define the expression “Foreign Portfolio Investor” to mean a person registered as per the provisions of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in relation to the assessment year 2026-2027 and subsequent assessment years.
It is also proposed to amend clause (4F) of the said section so as to extend the date of commencement of operations specified therein from 31st March, 2025 to 31st March, 2030.
It is also proposed to amend clause (4H) of the said section so as to extend the date of commencement of operations specified therein from 31st March, 2026 to 31st March, 2030.
It is also proposed to amend the said clause to also provide that income by way of capital gains arising from the transfer of equity shares of domestic company, being a Unit of an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, engaged primarily in the business of leasing of a ship shall not be included in computing the total income of a non-resident or a Unit of an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, engaged primarily in the business of leasing of a ship.
It is also proposed to amend the said clause to provide the meaning of “ship” as a ship or an ocean vessel, engine of a ship or ocean vessel, or any part thereof.
It is also proposed to amend the eighth proviso to clause (10D) so as to provide that the provisions of the fourth, fifth, sixth and seventh provisos shall not apply to any sum received,–
(i) on the death of a person; or
(ii) under a life insurance policy issued by International Financial Services Centre insurance intermediary office, including the sum allocated by way of bonus on such policy.
It is also proposed to insert an Explanation to the eighth proviso to the said clause to provide that “International Financial Services Centre insurance intermediary office” shall have the same meaning as assigned to it in clause (s) of sub-regulation (1) of regulation 3 of the International Financial Services Centres Authority (Insurance Intermediary) Regulations, 2021, made under the International Financial Services Centres Authority Act, 2019.
These amendments will take effect from 1st April, 2025.
It is also proposed to insert a new clause (12BA) in the said section so as to provide that any payment from the National Pension System Trust to an assessee, being the parent or guardian of a minor, under the pension scheme referred to in section 80CCD, on partial withdrawal made out of the account of the minor, as per the terms and conditions, specified under the Pension Fund Regulatory and Development Authority Act, 2013 and the regulations made thereunder, to the extent it does not exceed twenty-five per cent. of the amount of contributions made by such guardian.
Clause (23FE) of the said section, inter alia, provides that income of the nature of dividend, interest, any sum referred to in clause (xii) of sub-section (2) of section 56, or longterm capital gains arising from an investment made in India, shall not be included in computing the total income of a specified person. Sub-clause (i) of the said clause provides that the investment is to be made on or after 1st April, 2020 but on or before 31st March, 2025.
It is proposed to amend the opening portion of the said clause so as to provide that income in the nature of long-term capital gains (whether or not such capital gains are deemed as short-term capital gains under section 50AA), shall not be included in computing the total income of a specified person.
It is further proposed to amend sub-clause (i) of the said clause so as to extend the date of investment from 31st March, 2025 to 31st March, 2030.
These amendments will take effect from 1st April, 2025.
It is also proposed to amend clause (34B) so as to also provide that income by way of dividends from a company being a Unit of any International Financial Services Centre primarily engaged in the business of leasing of a ship, shall not be included in computing the total income of a Unit of any International Financial Services Centre, primarily engaged in the business of leasing of a ship.
It is also proposed to amend the Explanation of the said clause so as to define the expression “aircraft”, “International Financial Services Centre” and “ship”.
These amendments will take effect from 1st April, 2025.
Clause 13 of the Bill seeks to amend section 47 of the Income-tax Act relating to Transactions not regarded as transfer.
Clause (viiad) of the said section provides that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund, shall not be regarded as transfer for the purposes of section 45. The Explanation to the said clause provides, inter alia, the meaning of “resultant fund” for the purposes of the said clause.
It is proposed to substitute the said definition of the expression “resultant fund” to mean a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership, which is located in an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, and has been granted––
(i) a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund, and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 or regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022, made under the International Financial Services Centres Authority Act, 2019; or
(ii) a certificate as a retail scheme or an Exchange Traded Fund and which fulfils the conditions specified in clause (4D) of section 10;”
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in relation to the assessment year 2026-2027 and subsequent assessment years.
Clause (b) of the said Explanation provides that “relocation” means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before the 31st day of March, 2025, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund.
It is proposed to amend clause (b) of the Explanation to said clause so as to extend the date of transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund, from 31st March, 2025 to 31st March, 2030.
This amendment will take effect from 1st April, 2025.
Clause 19 of the Bill seeks to amend section 80LA of the Income-tax Act relating to deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre.
Clause (d) of sub-section (2) of the said section provides that the income referred to in sub-section (1) and sub-section (1A) shall be the income, arising from the transfer of an asset, being an aircraft or a ship, which was leased by a unit referred to in clause (c) to a person, subject to the condition that the unit has commenced operation on or before the 31st March, 2025.
It is proposed to amend the said clause so as to extend the date of commencement of operations from 31st March, 2025 to 31st March, 2030.
This amendment will take effect from 1st April, 2025.
Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions.
Clause (14) of the said section provides in sub-clause (b) that “capital asset”, means any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992. Further, sub-clause (c) of the said clause, provides that capital asset means any unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth provisos thereof.
It is proposed to amend sub-clause (b) of the said clause so as to insert the expression “or held by an investment fund specified in clause (a) of Explanation 1 to section 115UB” after the words “Foreign Institutional Investor”.
It is further proposed to amend sub-clause (c) of clause (14) of the said section so as to make it applicable for unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply.
These amendments will take effect from 1st April, 2026 and will, accordingly, apply in relation to the assessment year 2026-2027 and subsequent assessment years.
Clause (22) of the said section provides the definition of dividend. Sub-clause (e) of the said clause, inter alia, provides that any payment by a company, not being a company in which the public are substantially interested, of any sum, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent. of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits.
It is proposed to insert a new sub-clause (iia) in the said clause so as to provide that dividend does not include––
(iia) any advance or loan between two group entities, where,––
(A) one of the group entity is a “Finance company” or a “Finance unit”; and
(B) the parent entity or principal entity of such group is listed on stock exchange in a country or territory outside India other than the country or territory outside India as may be specified by the Board in this behalf;
It is further proposed to define the expressions “Finance company” or a “Finance unit”, and “group entity”, “parent entity” and “principal entity” in the Explanation to the said clause.
These amendments will take effect from 1st April, 2025.
It is also proposed to amend the clause (47A) of the said section to provide that the definition of virtual digital asset includes any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not already included in the definition of virtual digital asset.
This amendment will take effect from 1st April, 2026.
Clause 5 of the Bill seeks to amend section 9A of the Income-tax Act relating to certain activities not to constitute business connection in India.
Clause (c) of sub-section (3) of the said section, inter alia, provides that the eligible investment fund referred to in sub-section (1), means a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit and fulfils the condition that the aggregate participation or investment in the fund, directly or indirectly, by persons resident in India does not exceed five per cent. of the corpus of the fund.
It is proposed to amend the said clause so as to provide that the aggregate participation or investment in the fund, directly or indirectly, by persons resident in India does not exceed five per cent of the corpus of the fund, as on the 1st day of April and the 1st day of October of the previous year.
It is further proposed to insert a proviso to said clause so as to provide that where the aforesaid aggregate participation or investment in the fund exceeds five per cent on the 1st day of April or the 1st day of October of the previous year, the condition mentioned in this clause shall be deemed to be satisfied, if it is satisfied, within four months of the 1st day of April or the 1st day of October of such previous year, as the case may be.
Sub-section (8A) of the said section provides that the Central Government may, by notification, specify that any one or more of the conditions specified in clauses (a) to (m) of sub-section (3) or clauses (a) to (d) of sub-section (4) shall not apply or shall apply with such modifications, as may be specified in such notification, in case of an eligible investment fund and its eligible fund manager, if such fund manager is located in an International Financial Services Centre, and has commenced its operations on or before 31st March, 2024.
It is proposed to amend sub-section (8A) of the said section so as to extend the date of commencement of operations from 31st day of March, 2024 to 31st day of March, 2030.
It is further proposed to amend the said sub-section to provide that the Central Government may not relax condition in clause (c) of sub-section (3).
These amendments will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
6. Amendment of section 10.
In section 10 of the Income-tax Act
(a) in clause (4D), in the Explanation, in clause (aa), for the figures “2025”, the figures “2030” shall be substituted;
(b) in clause (4E), with effect from the 1st April, 2026,–
(i) in the long line, after the word, figures and letters “section 80LA”, the words “or any Foreign Portfolio Investor being a unit of an International Financial Services Centre” shall be inserted;
(ii) the following Explanation shall be inserted, namely:–
‘Explanation.––For the purposes of this clause, “Foreign Portfolio Investor” means a person registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992;’;
(c) in clause (4F), for the figures “2025”, the figures “2030” shall be substituted;
(d) in clause (4H),––
(i) in the opening portion,––
(A) for the word “aircraft” at both the places where it occurs, the words “aircraft or a ship” shall be substituted;
(B) for the figures “2026”, the figures “2030” shall be substituted;
(ii) for the Explanation, the following Explanation shall be substituted, namely:––
‘Explanation.—For the purposes of this clause,–
(a) “aircraft” means an aircraft or a helicopter, or an engine of an aircraft or a helicopter, or any part thereof;
(b) “ship” means a ship or an ocean vessel, engine of a ship or ocean vessel, or any part thereof;’;
(e) in clause (10D), for the eighth proviso, the following proviso shall be substituted, namely:––
‘Provided also that the provisions of the fourth, fifth, sixth and seventh provisos shall not apply to any sum received––
(a) on the death of a person; or
(b) under a life insurance policy issued by the International Financial Services Centre insurance intermediary office, including the sum allocated by way of bonus on such policy.
Explanation.––For the purposes of this proviso, “International Financial Services Centre insurance intermediary office” shall have the same meaning as assigned to it in clause (s) of sub-regulation (1) of regulation 3 of the International Financial Services Centres Authority (Insurance Intermediary) Regulations, 2021, made under the International Financial Services Centres Authority Act, 2019;’;
(f) after clause (12B), the following clause shall be inserted with effect from the 1st April, 2026, namely:––
“(12BA) any payment from the National Pension System Trust to an assessee, being the parent or guardian of a minor, under the pension scheme referred to in section 80CCD, on partial withdrawal made out of the account of the minor, as per the terms and conditions, specified under the Pension Fund Regulatory and Development Authority Act, 2013 and the regulations made thereunder, to the extent it does not exceed twenty-five per cent. of the amount of contributions made by him;”;
(g) in clause (23FE),––
(i) in the opening portion, after the words “long-term capital gains”, the brackets, words, figures and letters “(whether or not such capital gains are deemed as short-term capital gains under section 50AA)” shall be inserted;
(ii) in sub-clause (i), for the figures “2025”, the figures “2030” shall be substituted;
(h) in clause (34B),––
(i) for the word “aircraft” at both the places where it occurs, the words “aircraft or a ship” shall be substituted;
(ii) for the Explanation, the following Explanation shall be substituted, namely:––
‘Explanation.—For the purposes of this clause,––
(a) “aircraft” means an aircraft or a helicopter, or an engine of an aircraft or a helicopter, or any part thereof;
(b) “International Financial Services Centre” shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005;
(c) “ship” means a ship or an ocean vessel, engine of a ship or ocean vessel, or any part thereof;’.
13. Amendment of section 47.
In section 47 of the Income-tax Act, in clause (viiad), in the Explanation,––
(i) for clause (c), the following clause shall be substituted with effect from the 1st April, 2026, namely:––
‘(c) “resultant fund” means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership, which is located in an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, and has been granted–
(i) a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund, and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 or regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019; or
(ii) a certificate as a retail scheme or an Exchange Traded Fund as per item (b) of sub-clause (I) of clause (c) of the Explanation to clause (4D) of section 10 which fulfils the conditions specified in the said clause (4D).’;
(iii) in clause (b), for the figures “2025”, the figures “2030” shall be substituted.
19. Amendment of section 80LA.
In section 80LA of the Income-tax Act, in sub-section (2), in clause (d), for the figures “2025”, the figures “2030” shall be substituted.
3. Amendment of section 2.
In section 2 of the Income-tax Act,–– Amendment of section 2.
(a) in clause (14), with effect from the 1st April, 2026,–
(i) in sub-clause (b), after the words “Foreign Institutional Investor”, the words, brackets, letters and figures “or held by an investment fund specified in clause (a) of Explanation 1 to section 115UB” shall be inserted;
(ii) in sub-clause (c), the words “on account of the applicability of the fourth and fifth provisos thereof” shall be omitted;
(b) in clause (22),––
(i) in the long line, after sub-clause (ii), the following sub-clause shall be inserted, namely:––
‘(iia) any advance or loan between two group entities, where,––
(A) one of the group entity is a “Finance company” or a “Finance unit”; and
(B) the parent entity or principal entity of such group is listed on stock exchange in a country or territory outside India other than the country or territory outside India as may be specified by the Board in this behalf;’;
(ii) in Explanation 3, after clause (b), the following clauses shall be inserted, namely:––
‘(c) “Finance Company” and “Finance Unit” shall have the same meaning as assigned respectively to them in clauses (e) and (f) of sub-regulation (1) of regulation 2 of the International Financial Services Centres Authority (Finance Company) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019:
Provided that such Finance Company or Finance Unit, is set up as a global or regional corporate treasury centre for undertaking treasury activities or treasury services as per the relevant regulations made by the International Financial Services Centres Authority established under section 4 of the said Act;
(d) “group entity”, “parent entity” and “principal entity” shall be such entities which satisfy such conditions as prescribed in this behalf.’;
(c) in clause (47A), after sub-clause (c) and before the proviso, the following sub-clause shall be inserted with effect from the 1st April, 2026, namely:––
“(d) any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not such asset is included in sub-clause (a) or sub-clause (b) or sub-clause (c):”.
5. Amendment of section 9A.
(i) In section 9A of the Income-tax Act,–– Amendment of section 9A.
(a) in sub-section (3), in clause (c),––
(i) after the words “the corpus of the fund”, the words, figures and letters “as on the first day of April and the first day of October of the previous year” shall be inserted;
(ii) after the proviso, the following proviso shall be inserted, namely:––
“Provided further that where the said aggregate participation or investment in the fund exceeds five per cent. on the first day of April or the first day of October of the previous year, the condition mentioned in this clause shall be deemed to be satisfied, if it is satisfied within four months of the first day of April or the first day of October of such previous year, as the case may be;”;
(b) in sub-section (8A),––
(i) after the words, brackets and letters “in clauses (a) to (m)”, the brackets, words and letter “[other than clause
(c)]” shall be inserted;
(ii) for the figures “2024”, the figures “2030” shall be substituted.
