India: Tax exemption of pension fund income from certain investments

The KPMG member firm in India has prepared reports on recent tax developments

The KPMG member firm in India has prepared reports on recent tax developments

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

  • Pension funds and tax exemption for income from investments made in specified Indian infrastructure entities: The Central Board of Direct Taxes (CBDT) amended tax-related guidance for pension funds. Under prior guidance, pension funds had to satisfy certain specified conditions, including that the earnings and assets of the pension fund were used only for meeting certain statutory obligations and that no portion of the earnings or assets of the pension fund inured to the benefit to persons other than the fund or beneficiaries. Under the amended guidance, these conditions do not apply to any payment made to creditors or depositors for loans taken or for amounts borrowed for purposes other than for making investment in India. Also, under prior guidance, a pension fund could not undertake any commercial activity (whether within or outside India) if it were to claim an exemption pursuant to Section 10(23FE). The amended guidance removes this condition, and provides a uniform meaning of the term “loan and borrowing.” Read an April 2021 report [PDF 285 KB]
  • Applicability of permanent account number (PAN) to persons whose income is below taxable limit: The Karnataka High Court held that the PAN is mandatory—even if the income of a person is below the taxable limit. The case is: Smt. A. Kowsalya Bai1 and others. Read an April 2021 report [PDF 285 KB]

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