CBDT Notification No. 4/2024 dated. 4 January 2024
CBDT Notification 4/2024: In a recent development, the Central Government, exercising its authority under sub-clause (ii) of clause (4G) of section 10 of the Income-tax Act, 1961 (43 of 1961), has issued Notification 4/2024 on Dated.4 January 2024. This notification sheds light on the eligibility of income from investments in financial products by non-residents within the Offshore Banking Unit of an International Financial Services Centre (IFSC) for income tax deduction under section 80LA.
Let us delve in to the Key Highlights of CBDT Notification 4/2024.
Scope of Eligibility for Deduction:
The notification specifies that the eligible activity involves non-residents engaging in investment activities through a contract with a capital market intermediary. This intermediary must operate as a Unit of an International Financial Services Centre.
Offshore Banking Unit Criteria:
The income derived from such investments should be received in the non-resident’s account maintained with the Offshore Banking Unit of the IFSC. This provision is in accordance with sub-section (1A) of section 80LA.
Explanation of Terms:
To ensure clarity, the notification provides explanations for key terms:
- Capital market intermediary: As defined in clause (ga) of sub-regulation (1) of regulation 2 of the International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2021.
- Financial product: As outlined in sub-clause (d) of sub-section (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (50 of 2019).
- International Financial Services Centre: As Defined in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).
- Unit: Same meaning as assigned in clause (zc) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).
This move aims to provide a structured framework for non-residents participating in financial activities within IFSCs, encouraging investments and streamlining taxation procedures.
Conclusion:
In conclusion, CBDT Notification 4/2024 offers a beneficial avenue for non-residents involved in financial product investments at IFSCs, emphasizing the importance of Offshore Banking Units for income tax deductions under section 80LA. This regulatory update aligns with the government’s ongoing efforts to bolster international financial services and enhance the attractiveness of IFSCs for global investors.
To Download the CBDT Notification 4/2024 CLICK HERE
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