CBDT notifies conditions to claim exemption on transfer of non-deliverable forward contracts u/s 10(4E)

Notification No. 136/2021, dated 10-12-2021

The Finance Act, 2021 has inserted a new clause (4E) under section 10 to exempt any income accrued or arisen to, or received by a non-resident as a result of the transfer of non-deliverable forward contracts entered into with an offshore banking unit of IFSC which commenced operations on or before the 31st Mach, 2024 and fulfills prescribed conditions.

The CBDT has inserted a new Rule 21AK prescribing the following conditions to be fulfilled to claim the benefit of exemption:

(a) The non-resident enters into the non-deliverable forward contract with an offshore banking unit of an International Financial Services Centre which holds a valid certificate of registration granted under International Financial Services Centres Authority (Banking) Regulations, 2020 by the International Financial Services Centres Authority; and

(b) The non-resident does not enter into such contract through or on behalf of its permanent establishment in India.

The offshore banking unit shall ensure that the pointer (b) condition is complied with.

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