CBDT Amends Rule 21AK to Cover Offshore Derivative Instrument Income of NRs

Notification No. 50/2023, dated 17-07-2023

Rule 21AK of the Income Tax Rules, 1962 prescribes the conditions to claim exemption from income derived by a non-resident as a result of the transfer of non-deliverable forward contracts, offshore derivative instruments or over-the-counter derivatives under section 10(4E) of the Income Tax Act, 1961.

The Finance Act 2023 amended section 10(4E) to provide an exemption to any income distributed on the offshore derivative instruments entered into with an IFSC Banking Unit.

As a result of the said amendment, the Central Board of Direct Taxes (CBDT) has amended Rule 21AK to include income arising to a non-resident as a result of the distribution of income on offshore derivative instruments within the scope of exemption under section 10(4E).

Click Here To Read The Full Notification