Non-residents with income from the transfer of fixed assets referred to in Sec. 47 (viiab) Exempt from obtaining PAN: CBDT

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The Central Commission for Direct Taxes (CBDT) has notified the conditions to be fulfilled by foreign investors carrying out transactions in fixed assets.

The Council establishes the rules of income tax (14th amendment), 2021 to modify the rules of income tax, 1962.

In the Income Tax Rules, 1962, sub-rule (2A) must be inserted in rule 114AAB relating to the class or classes of persons to which the provisions of section 139A do not apply.

In accordance with the new sub-rule, the provisions of article 139A will not apply to a non-resident, being an eligible foreign investor, who has carried out a transaction only in an asset referred to in clause (viiab) of the Article 47 which are listed on a recognized stock exchange located in an international financial services center and the consideration for the transfer of this fixed asset is paid or payable in foreign currency, if both conditions are met.

First, the eligible foreign investor does not earn any income in India other than income from the transfer of an asset referred to in Article 47 clause (viiab).

Secondly, the eligible foreign investor provides the following details and documents to the broker through whom the transaction is carried out, namely name, e-mail id, contact number; address in the specified country or territory outside India of which he is a resident; a declaration that he is a resident of a specified country or territory outside of India; and the tax identification number in the specified country or territory of its residence and in the event that such a number is not available, a unique number on the basis of which the non-resident is identified by the government of that country or of the specified territory of which it claims to be a resident.

It should be noted that the securities broker must provide a quarterly statement for the fiscal quarter, in which the details and documents referred to in paragraph (2A) are received by him, in the form No. 49BA at Senior Managing Director of Income Tax (Systems) or the Managing Director of Income Tax (Systems) or the person authorized by him, electronically and upload the declaration referred to in paragraph (c) of the paragraph (ii) of paragraph (2A)) within fifteen days of the end of the quarter of the fiscal year to which this return relates in accordance with the procedures, formats and standards specified by the Chief Income Tax Officer (Systems) or the General Manager of Income Tax- tax (Systems) under sub-rule (3).

The CBDT is further seeking to amend Form No. 49BA relating to quarterly statements to be provided by the specified fund or securities dealer in respect of a non-resident referred to in Rule 114AAB.

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