CBDT PUTS CONDITIONS FOR PENSION FUNDS TO AVAIL TAX EXEMPTIONS

CBDT PUTS CONDITIONS FOR PENSION FUNDS TO AVAIL TAX EXEMPTIONS

As per the notification “No portion of the earnings or assets of the pension fund inures any benefit to any other private person,”

On August 17th, 2020, the Central Board of Direct Taxes (CBDT) has issued a notification, in which the department draws few conditions under which the pension funds can avail income tax exemptions

According to the notification, in order to avail of the income tax benefit, the pension funds must have invested in debt or equity investments of the infrastructure companies, but not in any other commercial activity in India or overseas. Income received from debt or equity investment is eligible for tax exemptions in case of investment of pension funds.

As per the terms and conditions as laid out by the CBDT, the pension fund must be regulated in those regions where it is based, and that proceeds from its investments should only be solely used for the purpose to provide pension, social security benefit, retirement, employment opportunity, disability, death benefits or similar compensation to participants.
 


 

As per the notification “No portion of the earnings or assets of the pension fund inures any benefit to any other private person,” 

Further, the disclosures related to investment must be fulfilled as per the specified forms. The disclosures should be made every quarter. It is also mandatory to file a form for returns on income earned from local investments.

In the month of July, the CBDT has issued a notification through which the department exempted pension funds, sovereign wealth funds, and the Abu Dhabi Investment Authority from paying tax on dividends and long-term capital gains (LTCG) on debt or equity investments.

As per the notification issued in the month of July, the department had specified 34 infrastructure sectors in which the funds can make investments.
 

For further information, please refer the link given below-

http://egazette.nic.in/WriteReadData/2020/221171.pdf
 

Edited by Minu Mishra

Want to get your business journey featured on CLIQTAX ? Send an email to us at editor@cliqtax.com