The CBDT has issued Notification No. 10/2025, dated January 27, 2025, introducing amendments to the Income-tax Rules, 1962. These amendments primarily address conditions for certain entities under the Income-tax Act, 1961, as follows:
- Venture Capital Funds (Rule 2DAA): For the purpose of clause (23FB) of section 10, Venture Capital Funds under the International Financial Services Centres Authority (IFSCA) Fund Management Regulations, 2022, will be recognized as Category I Alternative Investment Funds.
- Finance Companies in IFSCs (Rule 21ACA): Finance Companies in International Financial Services Centres (IFSCs) are permitted to engage in specific activities like lending, factoring, treasury functions, and other related financial services. Additionally, interest paid by such companies on foreign debt must be in foreign currency.
- Retail Schemes and Exchange-Traded Funds (Rule 21AIA): Retail schemes must meet conditions such as having at least 20 investors, with no single investor holding more than 25%, and limits on investments in associates, unlisted securities, and single companies. Exchange-Traded Funds must be listed on recognized stock exchanges and comply with IFSCA Fund Management Regulations.
Key definitions for terms like “associate,” “fund management entity,” and “specified fund” have been updated, aligning them with IFSCA regulations and the Special Economic Zones Act, 2005.
The Complete Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/01/CBDT-10-NOTIFICATION-27.01.2025.pdf
