Introduction: The Ministry of Finance, Department of Revenue, Central Board of Direct Taxes (CBDT), New Delhi, has issued Notification No. 95/2023-Income Tax on November 1, 2023. This notification specifies the conditions for tax exemption for BPC Penco XVII Corporation in accordance with the provisions of the Income-tax Act, 1961. In this article, we will provide a detailed analysis of the key points and implications of this notification.
Detailed Analysis
1. Background and Legal Authority
The notification is issued in exercise of the powers conferred by sub-clause (iv) of clause (c) of Explanation 1 to clause (23FE) of section 10 of the Income-tax Act, 1961 (hereinafter referred to as the Act). It is important to note that this provision of the Act allows for certain exemptions related to pension funds, subject to fulfilling specific conditions.
2. Identification of Specified Person
The Central Government has specified BPC Penco XVII Corporation (PAN: AALCB4169R) as the specified person eligible for tax exemption. This notification primarily pertains to the eligible investments made by BPC Penco XVII Corporation in India.
3. Conditions for Tax Exemption
The notification outlines a set of conditions that BPC Penco XVII Corporation must meet to avail of tax exemption on eligible investments made in India. These conditions include:
- Timely filing of income tax returns for relevant previous years.
- Submission of a compliance certificate (Form No. 10BBC) along with the return.
- Intimation of investment details within specified time frames (Form No. 10BBB).
- Maintenance of a segmented account for income and expenditure related to exempt investments.
- Continuation of regulation under the law of the Government of Ontario, Canada.
- Responsibility for administering or investing assets to meet statutory obligations.
- Restriction on the use of earnings and assets for the benefit of private individuals.
- Prohibition on loans or borrowings for investment purposes.
- Limitation on participating in the day-to-day operations of investee entities.
4. Consequences of Violation
The notification clearly states that any violation of the specified conditions as per clause (23FE) of section 10 of the Act and this notification will render BPC Penco XVII Corporation ineligible for tax exemption. Compliance with the conditions is essential to maintain the tax benefits provided.
Conclusion: Notification No. 95/2023-Income Tax issued by the CBDT provides clarity on the tax exemption conditions for BPC Penco XVII Corporation. This notification is essential for both the specified corporation and tax authorities to ensure compliance with the provisions of the Income-tax Act, 1961. Understanding and adhering to the specified conditions is crucial for availing tax benefits and avoiding any potential violations. It underscores the government’s commitment to regulating tax exemptions in a transparent and accountable manner.
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MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
New Delhi
Notification No. 95/2023-Income Tax | Dated: 1st November, 2023
S.O. 4755(E).—In exercise of the powers conferred by sub-clause (iv) of clause (c) of the Explanation 1 to clause (23FE) of section 10 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Act), the Central Government hereby specifies the pension fund, namely, BPC Penco XVII Corporation (PAN: AALCB4169R), (hereinafter referred to as the assessee) as the specified person for the purposes of the said clause in respect of the eligible investment made by it in India on or after the date of publication of this notification in the Official Gazette but on or before the 31st day of March, 2024 (hereinafter referred to as the said investments) subject to the fulfilment of the following conditions, namely:-
(i) the assessee shall file return of income, for all the relevant previous years falling within the period beginning from the date in which the said investment has been made and ending on the date on which such investment is liquidated, on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act;
(ii) the assessee shall furnish along with such return a certificate in Form No. 10BBC in respect of compliance to the provisions of clause (23FE) of section 10 of the Act, during the financial year, from an accountant as defined in the Explanation below sub-section (2) of section 288 of the Act, as per the provisions of clause (vi) of rule 2DB of the Income–tax Rules, 1962;
(iii) the assessee shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB, as per the provisions of clause (v) of rule 2DB of the Income–tax Rules, 1962;
(iv) the assessee shall maintain a segmented account of income and expenditure in respect of such investment which qualifies for exemption under clause (23FE) of section 10 of the Act;
(v) the assessee shall continue to be regulated under the law of the Government of Ontario, Canada;
(vi) the assessee shall be responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
(vii) the earnings and assets of the assessee should be used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (vi) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person; barring any payment made to creditors or depositors for loan or borrowing [as defined in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act] taken for the purposes other than for making investment in India;
(viii) the assessee shall not have any loans or borrowings [as defined in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Act], directly or indirectly, for the purposes of making investment in India; and
(ix) the assessee shall not participate in the day to day operations of investee [as defined in clause (i) of Explanation 2 to clause (23FE) of section 10 of the Act] but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in the day to day operations of the investee.
2. Violation of any of the conditions as stipulated in the said clause (23FE) of section 10 of the Act and this notification shall render the assessee ineligible for the tax exemption.
3. This notification shall come into force from the date of its publication in the Official Gazette.
[Notification No. 95/2023/F. No.500/PF10/S10(23FE)/FT&TR-II-Part(1)]
SRI VATSA SEHRA, Under Secy.
