Income-tax (Twentieth Amendment) Rules, 2025. Amendment to Rule 21AK

Income-tax (Twentieth Amendment) Rules, 2025. Amendment to Rule 21AK

CBDT notifies Income-tax (Twentieth Amendment) Rules, 2025. Amendment to Income Tax Rule 21AK- Conditions for the purpose of clause (4E) of section 10.

Under clause (4E) of section 10 of the Act, transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives; or distribution of income on offshore derivative instruments are exempt subject to fulfilment of the specified conditions

Amendment-after the words “offshore derivative instruments”, the words “or over-the-counter derivatives” shall be inserted;

One of the specified conditions is that the non-deliverable forward contract or offshore derivative instrument or over-the-counter derivative is entered into by the non-resident 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.

Amendment-Now, after the words “by the International Financial Services Centres Authority’’, the words “or any Foreign Portfolio Investor being a unit of an International Financial Services Centre” shall be inserted.

Under the said Rule it has ben provided that he offshore banking unit shall ensure that such contract, instrument or derivative is not entered into by the non-resident through or on behalf of its permanent establishment in India.

Amendment – Now, after the words “offshore banking unit”, the words “or the Foreign Portfolio Investor” shall be inserted

Explanation to the Rule 21AK provides for the meaning of the terms used in the Rule.

“over-the-counter derivatives” has bene defined to mean a derivative contract that is not traded on an exchange but instead is privately negotiated between a purchaser and a seller.

Amendment- for the words “a purchaser and a seller; and”, the words “a purchaser and a seller;” shall be substituted.

Amendment- “Foreign Portfolio Investor” has been defined to mean a person registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).

Download CBDT Notification No. 126/2025 Click Here >>

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