Last updated: August 23rd, 2024 5:55 PM

Income Tax 20th Amendment Rules 2020

The Central Board of Direct Taxes (CBDT) has further amended the Income-tax Rules, 1962 in a notification dated 17th August 2020 to be called Income Tax 20th Amendment Rules 2020. This is released in Gazette as per the requirement of the Government of India and this article will provide details on the same.

The Gist of the Income Tax 20th Amendment Rules 2020

The Income-tax Rules, the amendment is brought under rule 2DB which specifies the other conditions for the pension fund. For clause (23FE) of section 10 of Income-tax Rules, the pension fund needs to satisfy six other conditions. This change has been made by adding a new rule 2DB after rule 2DA under section 10(23FE) of the Income Tax Act, 1961 of the Income Tax Rules 1962.

Clause (23FE) of section 10 of Income-tax rules

Section 10(23FE) of the Income Tax Act, 1961, as inserted by the Finance Act, 2020, provides for an exemption to the specified income of certain entities including notified Venture Capital fund & Pension Funds (PF) from investment in specified infrastructure sectors.

Existing Rule 2DA under Section 10(23FE) of Income-tax rules

Rule 2DA of Income-tax rules specifies the Guidelines for approval under clause (23FA) of section 10

• A venture capital fund or venture capital company needs to make an application in Form No. 56AA for getting approval from the Central Government. The Central Government may approve the venture capital fund or the venture capital company, subject to some condition.
• A venture capital fund or a venture capital company should be registered with the Securities and Exchange Board of India and established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992)
• A venture capital fund or a venture capital company shall not invest more than twenty-five per cent of its total monies raised or total paid-up share capital in one venture capital undertakings

The venture capital fund need to maintain books of account and get such books audited by an accountant and furnish the report of such audit duly signed and verified by such accountant to the Central Government before the due date of filing of the return After the verification, the Central Government will pass an order in writing granting approval or refusing approval to the venture capital fund or Venture Capital Company

Amendment made in Income Tax 20th Amendment Rules 2020

As mentioned above, a new Rule 2DB has been inserted, and the pension fund needs to satisfy the following conditions:

Governing Law

The pension fund will be regulated under the law of a foreign country including the laws made by any of its political constituents being a province, state, or local body under which PF is created.

Purpose of the Pension Fund

The pension fund is responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds established for the following purposes:

• For providing retirement
• For offering social security
• For providing employment
• For granting disability benefits and death benefits
• Any similar compensation to the participants of pension funds

Note: The Pension fund should not undertake any commercial activity within or outside India

Intimating details of Investments

The pension fund will intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 10BBB.

Income Tax Return Filing for Pension Fund

Further, it will file a return of income on or before the due date and furnish along with such return a certificate in Form No.10BBC in respect of compliance to the provisions of clause (23FE) of section 1

Procedure to File Investments Details of Pension Fund to CBDT

According to clause (23FE) of section 10 of the Income-tax Act, 1961, the applicant of the Pension Fund needs to furnish the applications to CBDT before investing.

Form No. 10BBA

As per the clause (23FE) of section 10, the pension fund needs to make an application in Form No.10BBA enclosing relevant documents and evidence, to the following prescribed authority:

• Member (Legislation), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi during the financial year 2020-2021.
• Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division during the other financial years.

Details Required

The applicant needs to furnish the following details to CBDT for making investments:

• Name of the Pension Fund
• Address of the Pension Fund
• Tax Identification Number of the country of residence
• Country of residence
• Permanent Account Number
• Details of law under which the Pension Fund is created

Documents Required

The applicant needs to furnish the following documents:

• Documents constituting the Pension Fund and any later amendment
• Any other relevant document or information

Form 10BBB

A new Form 10BBB has been inserted which is for the Intimation by Pension Fund of investment under clause (23FE) of section 10 of the Income-tax Act, 1961. The applicant needs to intimate the details of the investment within one month from the end of the quarter ending on 30th June, 30th September, 31st December, and 31st March of the financial year.

Form 10BBC

A new Form 10BBC has been inserted to publish the Certificate of accountant in respect of compliance (return) to the provisions of clause (23FE) of section 10 of the Income-tax Act, 1961 by the notified Pension Fund. The notification pertaining to the Income Tax 20th Amendment Rules 2020 is as follows: