{"id":13566,"date":"2019-07-05T13:30:19","date_gmt":"2019-07-05T08:00:19","guid":{"rendered":"http:\/\/itatonline.org\/info\/?p=13566"},"modified":"2019-07-05T13:30:19","modified_gmt":"2019-07-05T08:00:19","slug":"cbdt-circular-clarifies-taxability-of-non-residents-income-from-off-shore-aif-investments","status":"publish","type":"post","link":"https:\/\/itatonline.org\/info\/cbdt-circular-clarifies-taxability-of-non-residents-income-from-off-shore-aif-investments\/","title":{"rendered":"CBDT Circular Clarifies Taxability Of Non-Residents&#8217; Income From Off-shore AIF Investments"},"content":{"rendered":"<p>The CBDT has vide Circular No. 14\/2019 dated 3rd July 2019 provided important clarification regarding the taxability of income earned by non-resident<br \/>\ninvestors from off-shore investments routed through an Alternate Investment Fund.<\/p>\n<p><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<!-- responsive --><br \/>\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-6440093791992877\"\n     data-ad-slot=\"6406297397\"\n     data-ad-format=\"auto\"><\/ins><br \/>\n<script>\n(adsbygoogle = window.adsbygoogle || []).push({});\n<\/script> <\/p>\n<div class=\"journal2\"><a href=\"https:\/\/itatonline.org\/info\/cbdt-circular-clarifies-taxability-of-non-residents-income-from-off-shore-aif-investments\/cbdt-aif-circular\/\" rel=\"attachment wp-att-13567\">Click here to download Circular No. 14\/2019 dated 3rd July 2019<\/a><\/div>\n<blockquote><p>Circular No. 14\/2019<br \/>\nGovernment of India<br \/>\nMinistry of Finance<br \/>\nDepartment of Revenue<br \/>\nCentral Board of Direct Taxes<br \/>\nNorth-Block, New Delhi, dated the 3rd of July, 2019<\/p>\n<p>Subject: Clarification regarding taxability of income earned by a non-resident<br \/>\ninvestor from off-shore investments routed through an Alternate Investment Fund reg.<\/p>\n<p>In the context of Alternate Investment Funds (AlFs), references have been made to the<br \/>\nCentral Board of Direct Taxes (the Board) seeking clarity regarding taxability of income from<br \/>\ninvestments made by the non-resident investor through these AIFs, outside India (off-shore<br \/>\ninvestment).<\/p>\n<p>2. The incidence of tax arising from off-shore investment made by a non-resident investor<br \/>\nthrough the AlFs would depend on determination of status of income of non-resident investor as<br \/>\nper provisions of section 5(2) of the Income-tax Act, 1961 (Act). As per section 5(2) of the Act,<br \/>\nthe income of a person who is non-resident, is liable to be taxed in Ind ia if it is received or is<br \/>\ndeemed to be received in India in such year by or on behalf of such person; or accrues or<br \/>\narises or is deemed to accrue or arise to him in India.<\/p>\n<p>3. Chapter XII-FB contains special provisions relating to tax on income of investment funds and<br \/>\nincome received from such funds. Under Chapter XII-FB, section 115UB of the Act ( &#8216;Tax on income<br \/>\nof investment fund and its unit holders) is the applicable provision to determine the income and<br \/>\ntax-liability of investment funds &#038; their investors. In this context, &#8220;investment fund&#8221;is defined in<br \/>\nExplanation 1 of Chapter XII-FB to mean any fund established or incorporated in India in the form<br \/>\nof a trust or a company or a limited liability partnership or a body corporate which has been<br \/>\ngranted a certificate of registration as a Category I or Category II Alternative Investment Fund<br \/>\nand is regulated under the Securities and Exchange Board of India (Alternative Investment Fund)<br \/>\nRegulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of<br \/>\n1992). Thus, provisions of section 115UB apply only to Category I or Category II AIFs, as defined<br \/>\nin SEBIs regulations.<\/p>\n<p>4. By an overriding effect over other provisions of the Act, sub-section (1) of section 115UB of<br \/>\nthe Act provides that any income accruing or arising to, or received by, a person, being a unit<br \/>\nholder of an investment fund, out of investments made in the investment fund, shall be<br \/>\nchargeable to income-tax in the same manner as If it were the income accruing or arising to. or<br \/>\nreceived by. such person had the investments made by the investment fund been made directly<br \/>\nby him and not through the AIF.<\/p>\n<p>5. The matter has been considered by the Board. As section 115UB( l) of the Act provides that<br \/>\nthe investments made by Category I or Category II AIFs are deemed to have been made by the<br \/>\ninvestor directly, it is hereby clarified that any income in the hands of the non-resident investor<br \/>\nfrom off-shore investments routed through the Category I or Category II AIF, being a deemed<br \/>\ndirect investment outside India by the non-resident investor, is not taxable in India under section<br \/>\n5(2) of the Act,<\/p>\n<p>6. It is further clarified that loss arising from the off-shore investment relating to non-resident<br \/>\ninvestor, being an exempt loss, shall not be allowed to be set-off or carried-forward and set off<br \/>\nagainst the income of the Category I or Category II AIF.<\/p>\n<p>7. The contents of this Circular may be circulated widely for information of all stakeholders and<br \/>\ndepartmental officers.<\/p>\n<p>8. Hindi version to follow,<br \/>\n(Rajarajeswari R.)<br \/>\nUnder Secretary (ITA.II), CBDT<br \/>\n(F.No. 225\/79\/2019-ITA.II)<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>The CBDT has vide Circular No. 14\/2019 dated 3rd July 2019 provided important clarification regarding the taxability of income earned by non-resident<br \/>\ninvestors from off-shore investments routed through an Alternate Investment Fund<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/info\/cbdt-circular-clarifies-taxability-of-non-residents-income-from-off-shore-aif-investments\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1,7],"tags":[],"class_list":["post-13566","post","type-post","status-publish","format-standard","hentry","category-all-information","category-others"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/13566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/comments?post=13566"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/13566\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/media?parent=13566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/categories?post=13566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/tags?post=13566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}