Draft Income Tax Rule 144 – Other conditions required to be fulfilled by a specified fund as referred to in Schedule VI [Note 1(g)(i)]
Draft Rule 144 of the Income-tax Rules, 2026 lays down additional conditions that must be fulfilled by a specified fund under Schedule VI [Note 1(g)(i)]. The rule mandates that any unit holder of the specified fund, other than the sponsor or manager, who becomes a resident under section 6(2) to (7) in a tax year subsequent to the year of issuance of units, must cease to hold such units within three months from the end of the tax year in which residency is acquired. To ensure compliance, the specified fund is required to maintain detailed documentation of its unit holders, including name, tax identification number in the country of residence at the time of issuance, permanent account number (if available), total number and value of units held, whether the unit holder is a sponsor or manager, the tax year in which residency status changed, and the date of exit from the fund. The fund must certify compliance with these conditions and furnish information regarding units held by residents in the annual statement of exempt income in Form No. 68. The rule further provides that income attributable to non-resident unit holders shall not qualify for exemption under section 11(1) read with Schedule VI unless the fund complies with these certification and reporting requirements.
Extract of Rule No. 144 of Draft Income-tax Rules, 2026
Rule 144
Other conditions required to be fulfilled by a specified fund as referred to in Schedule VI [Note 1(g)(i)].
(1) For the purposes of Schedule VI [Note 1(g)(i)] of the Act, the “other conditions” required to be fulfilled by a specified fund shall be that —
(a) the unit holder of the specified fund, other than the sponsor or manager of such fund, who becomes a resident under section 6(2) to (7) of the Act in any tax year subsequent to the tax year in which such unit or units were issued, shall cease to be a unit holder of such specified fund within a period of three months from the end of the tax year in which he becomes a resident;
(b) for the purposes of clause (a), the specified fund shall maintain the following documents in respect of its unit holders, —
(i) name of the unit holder;
(ii) tax identification number of the unit holder in the country of residence at the time the units were issued;
(iii) permanent account number, if available;
(iv) total number of units held;
(v) total value of units held;
(vi) whether unit holder is a sponsor or a manager;
(vii) the tax year in which the unit holder became resident and;
(viii) date of exit from specified fund.
(2) The specified fund shall certify that it has fulfilled the conditions under sub-rule (1) and furnish information in respect of units held by residents in the annual statement of exempt income in Form No. 68.
(3) The income attributable to units held by non-resident (not being the permanent establishment of a non-resident in India) in a specified fund shall not be exempt under section 11(1) read with Schedule VI [Table: Sl. Nos. 1 to 4] unless the specified fund complies with sub-rule (2).
(4) For the purposes of this rule, “specified fund” shall have the same meaning as assigned to it in Schedule VI [Note 1(g)].
