The CBDT has notified Income Tax (14th Amendment) Rules 2021, which laid down the rules relating to non-applicability of the provision of section 139A to non-resident, being eligible foreign investors making a transaction only in capital assets referred in clause (viiab) of section 47 in a specified manner. Also, this notification delegates some responsibilities on stockbrokers to furnish required information periodically in a specified manner to the designated authority.

In the Income Tax Rules, 1962, the sub-rule (2A) and (2B) are inserted in the rule 114AAb related to “Class or classes of person to whom provisions of section 139A shall not apply”.

Sub Rule (2A): The Provision of section 139A (related to “Permanent Account Number”) shall not apply to a non-resident being an eligible foreign investor, who has made transaction only in capital asset referred to in clause (viiab) of section 47 which are listed on a recognised stock exchange located in International Financial Service Centre and the consideration of such capital asset is paid or payable in foreign currency, if the following conditions are fulfilled, namely:-

i) The eligible foreign investor does not earn any income in India, other than income from transfer of capital asset referred to in clause (viiab) of section 47.

ii) The eligible foreign investor furnishes the following details and documents to the stockbroker through which the transaction is made namely:

a) Name, e-mail id, contact number

b) Address in the country or specified territory outside India of which he is a resident;

c) A declaration that he is a resident of a country or specified territory outside India and

d) Tax Identification Number in the country or specified territory of his residence or in case no such number is available, then a unique number based on which the non-resident is identified by the Government of that country or the specified territory of which he claims to be non-resident.

Transfer as per Section 47(viiab): Transfer of capital assets, being:-

(a) bond or Global Depository Receipt referred to in sub-section (1) of section 115AC; or

(b) rupee denominated bond of an Indian company; or

(c) derivative; or

(d) such other securities as may be notified by the Central Government in this behalf,

made by a non-resident on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency.

Eligible Foreign Investor is defined as a non-resident who operates in accordance with the Securities and Exchange Board of India, circular IMD/HO/FPIC/CIR/P/2017/003 dated 04th January, 2017)

Sub Rule (2B): This sub-rule entrusted stock brokers with the responsibility to furnish a quarterly statement in Form No. 49BA for the quarter of the financial year, in which the details and documents referred to in sub-rule (2A) are received by it. The information shall be furnished to the Principal Director General of Income Tax (Systems) or the Director General of Income Tax (Systems) or the person authorized by him, electronically and upload the declaration of residency as stated in sub-clause (c) in clause (ii) of sub-rule (2A) within 15 days from the end of the quarter of the financial year to which that statement relates in accordance with the procedures specified by the Principal Director of Income Tax (Systems) or the Director of Income Tax (Systems) under sub-rule (3).

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