Draft Income Tax Rule 157 – Persons Exempt from Obtaining permanent account number under Section 262 of the Act
Rule 157 of the Draft Income-tax Rules, 2026 provides exemption from obtaining a Permanent Account Number (PAN) under section 262 for specified categories of non-residents, subject to defined conditions. Under sub-rule (1), a non-resident (other than a company or foreign company) who invests in a specified fund during a tax year is exempt if he earns no income in India other than income from such investment, the applicable income-tax is fully deducted at source and remitted by the specified fund at prescribed rates, and specified personal and residency details, including Tax Identification Number (TIN) or equivalent identification, are furnished to the fund. The specified fund must file quarterly statements in Form No. 92 and upload foreign residency declarations within 15 days of the relevant quarter. Sub-rule (3) extends similar exemption to eligible foreign investors transacting only in specified capital assets listed on a recognised stock exchange in an International Financial Services Centre (IFSC), where consideration is in foreign currency and no other income is earned in India. Such investors must furnish prescribed details to the stock broker, who in turn must comply with quarterly reporting and declaration upload requirements. The rule also defines “specified fund,” “International Financial Services Centre,” “eligible foreign investor,” and “stock broker” for clarity. Overall, Rule 157 facilitates ease of doing business for foreign investors while maintaining reporting safeguards.
Extract of Rule No. 157 of Draft Income-tax Rules, 2026
Rule 157
Persons Exempt from Obtaining permanent account number under Section 262 of the Act.
(1) The provisions of section 262 shall not apply to a non-resident (not being a company or a foreign company) who has, during a tax year, made investment in a specified fund, if the following conditions are met, namely: —
(a) the non-resident does not earn any income in India other than the income from the investment in the specified fund during the tax year;
(b) the income-tax due on such income of non-resident has been is deducted at source and remitted to the Central Government by the specified fund at the rates specified sections 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14]; and
(c) the non-resident furnishes the following details and documents to the specified fund, namely:
(i) name, email id, and contact number;
(ii) address in the country or specified territory outside India of which he is a resident;
(iii) a declaration that he is a resident of a country or specified territory outside India; and
(iv) Tax Identification Number (TIN) in the country or specified territory of his residence or and in case no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory.
(2) The specified fund shall:
(a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (1)(iii) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him;
(b) upload the declaration of foreign residency as referred to in sub-rule (1)(i)(iii) within 15 days from the end of the quarter of the financial year to which such statement relates.
(3) The provisions of section 262 shall not apply to a non-resident being an eligible foreign investor, who has made transaction only in capital assets referred to in section 70(1)(r) which are listed on a recognised stock exchange located in any International Financial Services Centre and the consideration on such transfer of capital asset is paid or payable in foreign currency, if the following conditions are fulfilled, namely: —
(a) the eligible foreign investor does not earn any income in India, other than the income from transfer of a capital asset referred to in section 70(1)(r);
(b) the eligible foreign investor furnishes the following details and documents to the stock broker through which the transaction is made namely: —
(i) name, email id, and contact number;
(ii) address in the country or specified territory outside India of which he is a resident;
(iii) a declaration that he is a resident of a country or specified territory outside India; and
(iv) Tax Identification Number (TIN) in the country or specified territory of his residence or and in case no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory.
(4) The stock broker shall:
(a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (3) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him; and
(b) upload the foreign residency declaration as referred to in sub-rule (3)(ii)(c) within 15 days from the end of such quarter of the financial year to which such statement relates.
(5) For the purposes of this rule: — the following shall be defined as follows:
(a) “specified fund” shall have the same meaning as assigned to in Schedule VI [Note (1)(g)];
(b) “International Financial Services Centre” shall have the same meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005);]
(c) “eligible foreign investor” means a non-resident who operates in accordance with the Securities and Exchange Board of India, Circular IMD/HO/FPIC/CIR/P/2017/003, dated 4th January, 2017;
(d) “stock broker” means a person having trading rights in a recognised stock exchange located in any International Financial Services Centre and the member of such exchange
