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The Central Board of Direct Taxes (CBDT) has set up a committee to examine the applications of offshore funds having fund managers in India and looking to avail the beneficial tax regime in the country.
The panel will be headed by Chief Commissioner of Income Tax (international taxation), West Zone, Mumbai and comprise two members — Commissioner of Income Tax (international taxation)-I, Mumbai and Commissioner of Income Tax (transfer pricing)-I, Mumbai.
The committee will verify and analyse the application of grant of registration of offshore funds and make recommendations to the CBDT for approval or otherwise.
Once the registration is granted, an offshore fund shall not be deemed to have any “business connection” (taxable presence) in India and its income will only be subject to capital gains, subject to any treaty benefits, if any, said Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law firm. Further, the offshore fund will also be deemed not to have its place of effective management in India, by virtue of activities of Indian fund manager.
This will bring certainty to offshore funds in tax treatment and availing tax treaty benefits, if any, Singhania told BusinessLine .
It may be recalled that the Finance Act 2015 had inserted a new provision —Section 9A — in the income-tax law with effect from April 1, 2016. This was done to provide a special regime in respect of offshore funds having fund managers located in India.
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