CBDT Extends Scope of Non-applicability of Sec. 56(2)(x) to Fund Relocation to IFSC

Notification No. 51/2023, dated 18-07-2023

The Central Board of Direct Taxes (CBDT) issued a notification amending Rule 11UAC to widen the scope of non-applicability of Section 56(2)(x). The Board has extended the exemption to fund relocation to IFSC.

Shares/units/interest received by the fund management entity of the resultant fund, in lieu of shares or units or interest held by the investment manager entity in the original fund, won’t be taxable if the following conditions are met:

a) Not less than 90% of shares or units or interest in the fund management entity of the resultant fund are held by the same entities in the same proportion as held by them in the investment manager entity of the original fund; and

b) Not less than 90% of the aggregate of shares or units or interest in the investment manager entity of the original fund was held by such entities.

The expressions “relocation”, “original fund” and “resultant fund” shall have the meanings respectively assigned to them in the Explanation to section 47(viiac)/(viiad).

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