Clause 5 of the Bill seeks to amend section 10 of the Income tax Act relating to incomes not included in total income. It is proposed to amend the Explanation to clause (4D) of the said section to give reference of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 in the definition of “specified fund”.
This amendment will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years. Clause (4E) of the said section provides that any income accrued or arisen to, or received by a non-resident as a result of transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives entered into with an offshore banking unit of an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, which fulfils such conditions as may be prescribed, shall not be included in the total income.
It is further proposed to include distribution of income on offshore derivative instruments also within the ambit of the said clause.
It is also proposed to insert a proviso to provide that the amount of distributed income referred to in the said clause shall include only so much of the amount which is chargeable to tax in the hands of the offshore banking unit under section 115AD.
These amendments will take effect from 1st April, 2024 and, will, accordingly apply in relation to the assessment year 2024-2025 and subsequent assessment years.
Clause (10D) of the said section, inter alia, provides exemption to any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy. It is also proposed to omit the reference of Explanation to sub-section (2A) of section 88 in the second proviso to clause (10D) of the said section which is consequential due to the omission of section 88. This amendment will take effect from 1st April, 2023.
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