CBDT Issues Clarification On Taxability Of Income Earned From Off-Shore Investments In Investment Fund Routed Through An AIF

The Central Board of Direct Taxes (CBDT) issued a clarification on the taxability of income earned by a non-resident investor from outside India (off-shore investment) routed through an investment fund.

The Circular was made applicable to Category I or Category II Alternative Investment Funds (AIFs) regulated under Securities and Exchange Board of India (SEBI) regulations.

By the Finance Act, 2023, the definition of 'investment fund' under the Income-tax Act, 1961 was amended to include reference to the International Financial Services Centres Authority (Fund Management) Regulations, 2022 under the International Financial Services Centres Authority (IFSCA) Act, 2019.

Pursuant to the amendments made by the Finance Act, 2023, in the definition of ‘investment fund, CBDT amends the 2019 Circular to include ‘any fund established or incorporated in India regulated by the Financial Services Centres Authority (Fund Management) Regulations, 2022 under the IFSCA Act’.

Circular No. 12 12023

Date: 12 July, 2023

Click Here To Read The Circular