CBDT notifies the Income tax (22nd Amendment), Rules, 2021, to prescribe methodology for computing income of specified funds covered u/s 10(4D)/115AD of the Income tax Act, 1961, attributable to non residents, vide Notification 90/2021 dt. 09/08/2021.
CBDT Income Tax Notification 90/2021 dt. 09/08/2021: Income tax (22nd Amendment), Rules, 2021
Section 10(4D) of the Income-tax Act, 1961 provides for certain tax exemptions and Section 115AD prescribes the concessional tax regime in the case of specified funds or Foreign Institutional Investor (FIIs). However, rules for determination of such income of the Specified Funds/ FIIs were not prescribed so far.
Accordingly, new IT Rules 21AI {Computation of exempt income of specified fund for the purposes of clause (4D) of section 10} and 21AJ {Determination of income of a specified fund attributable to units held by non-residents under sub-section (1A) of section 115AD} have been inserted in the Income Tax Rules, 1962, along with Form No. 10IG {Statement of Exempt income under clause (4D) of section 10 of the Income-tax Act, 1961} and Form No. 10IH {Statement of income of a Specified fund eligible for concessional taxation under section 115AD of the Income tax Act, 1961}, for the purpose.
New IT Rules 21AI and 21AJ provides for computation of exempt income u/s 10(4D) and income taxable at concessional rates u/s 115AD on a prorata basis, i.e. the mechanism for computing exempt income attributable to non-residents in respect of their units in a specified fund.