Draft Income Tax Rule 141 – Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit under Schedule VI [Table: Sl. Nos. 1 to 4]
Draft Rule 141 of the Income-tax Rules, 2026 lays down the method for computing exempt income of a specified fund attributable to the investment division of an offshore banking unit under Schedule VI (Table Sl. Nos. 1 to 4). The exemption is determined through a direct aggregation formula: A + B + C + D. Here, A represents income from transfer of capital assets referred to in section 70(1)(r), transacted on a recognised stock exchange in an International Financial Services Centre (IFSC) with consideration in convertible foreign exchange; B covers income from transfer of securities other than shares of Indian resident companies; C includes income from securities issued by non-residents that does not accrue or arise in India; and D pertains to income from securitisation trusts chargeable under the head “Profits and gains of business or profession.” The rule expressly provides that any expenditure incurred in relation to income under items A to D shall not be allowed as deduction against any other income under the Act, irrespective of whether such expenditure has been allowed against the exempt income. The eligible investment division is required to furnish an annual statement of exempt income in Form No. 70 electronically under digital signature by the due date specified under section 263(1)(c). The rule defines “eligible investment division” as a registered investment division meeting conditions under Rule 142 and adopts relevant meanings of securities, specified fund, and offshore banking unit from Schedule VI.
Extract of Rule No. 141 of Draft Income-tax Rules, 2026
Rule 141
Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit under Schedule VI [Table: Sl. Nos. 1 to 4].
(1) For the purposes of Schedule VI [Table: Sl. Nos. 1 to 4] of the Act, exempt income of specified fund attributable to the investment division of an offshore banking unit shall be computed in accordance with the following formula —
A + B + C + D
where, —
A = any income accrued or arisen to, or received by the eligible investment division as a result of transfer of a capital asset referred to in section 70(1)(r) held by it, on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange;
B = any income accrued or arisen to, or received by the eligible investment division as a result of transfer of securities held by it (other than shares in a company resident in India);
C = any income accrued or arisen to, or received by the eligible investment division from securities held by it and issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India;
D = any income accrued or arisen to, or received by the eligible investment division from a securitisation trust which is chargeable under the head “Profits and gains of business or profession”.
(2) Any expenditure incurred in relation to income referred to in items A or B or C or D shall not be allowed as deduction from any other income under any provision of the Act, irrespective of the fact that such expenditure has not been allowed as deduction against income referred to in items A or B or C or D.
(3) The eligible investment division shall furnish an annual statement of exempt income in Form No. 70 electronically under digital signature on or before the due date specified under section 263(1)(c) and duly verified in the manner indicated therein.
(4) For the purposes of this rule, —
(a) “eligible investment division” shall mean a registered investment division which fulfils the conditions specified in rule 142;
(b) “investment division of an offshore banking unit” shall have the same meaning as assigned to it in Schedule VI [Note 1(b)];
(c) “securities” shall have the same meaning as assigned to it in Schedule VI [Note (1)(e)];
(d) “specified date”, in relation to the accounts of the registered investment division of any tax year, means a date one month prior to the due date specified under section 263(1)(b) for the said tax year;
(e) “specified fund” shall have the same meaning as assigned to it in Schedule VI [Note (1)(g)].
