CBDT Exempts Activity Of Investment In Financial Product By Non-Resident Where Income Received In Offshore Banking Unit

The Central Board of Direct Taxes (CBDT) has exempted the activity of investment in financial products by non-residents where income is received in the account of the non-resident maintained with the Offshore Banking Unit.

The Board empowered under section 10(4G)(ii) of the Income-tax Act, 1961 notified the activity of investment in a financial product by the non-resident, in accordance with a contract with non-resident entered into by a capital market intermediary, being a Unit of an International Financial Services Centre, where the income from such investment is received in the account of the non-resident maintained with the Offshore Banking Unit of International Financial Services Centre, as referred to in section 80LA (1A).

Section 10(4G) relates to the income of non-residents from portfolio services and specified activities. Any income received by a non-resident from a portfolio of securities or financial products or funds managed or administered by any portfolio manager on behalf of such non-resident. This exemption will be available only if income arises in an account maintained with an Offshore Banking Unit in any International Financial Services Centre. The CBDT may also notify specified activity carried out by specified persons that will fall under the scope of section 10(4G) exemption. However, the exemption will be limited to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India.

Notification No. 04/2024

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