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SCHEDULE V

 

INCOME NOT TO BE INCLUDED IN TOTAL INCOME OF CERTAIN ELIGIBLE PERSONS INCLUDING INVESTMENT FUNDS, BUSINESS TRUSTS AND THEIR UNIT HOLDERS

 

 In computing the total income of a tax year of any eligible person mentioned in column C of the Table below, the income mentioned in column B of the said Table shall not be included, subject to the conditions mentioned in column D of the said Table, and the expressions used in columns B to D of the said Table shall have the meanings respectively assigned to them in Notes below the said table

 

Table

 

Sl.No.

Income not to be included in total income

Eligible persons

Conditions

A

B

C

D

1

Any income other than the income chargeable under the head “Profits and gains of business or profession”.

An investment fund.

Nil.

2

Any income referred to in section 224, accruing or arising to, or received being that proportion of income which is of the same nature as income chargeable under the head “Profits and gains of business or profession”.

A unit holder of an investment fund.

Nil.

3

Any income by way of—

A business trust.

Nil.

 

a. interest received or receivable from a special purpose vehicle; or

 

 

 

b.dividend received or receivable from a special purpose vehicle.

 

 

4

Any income by way of renting or leasing or letting out any real estate asset owned directly by such business trust.

A business trust, being a real estate investment trust.

Nil.

5

Any distributed income referred to in section 223.

Any unit holder of a business trust.

Exemption shall not be allowed on that proportion of the income which is of the same nature as––

 

 

 

(a) interest received or receivable from a special purpose vehicle by the business trust; or

 

 

 

b.dividend received or receivable from a special purpose vehicle by the business trust (in a case where the special purpose vehicle has exercised the option under section 200); or

 

 

 

c. income of a business trust, being a real estate investment trust, by way of renting or leasing or letting out any real estate asset owned directly by such business trust.

6

Any income from investment in a venture capital undertaking.

Venture capital company or venture capital fund other than an investment fund specified in section 224(10)(a).

Nil.

7

Any income of the nature of––

a specified person.

a. Such investment—

 

a. dividend;

 

i.  is made on or after the 1st April, 2020 but on or before the 31st March, 2030;

 

b. interest;

 

ii. is held for at least three years; and

 

c. any sum referred to in section 92(2)(k); or

 

iii. is in,—

 

 

 

A. a business trust being an eligible InvIT;

 

d. long-term capital gains (whether or not such capital gains are deemed as short-term capital gains under section 76), arising from an investment made by a specified person in India, whether in the form of debt or share capital or unit.

 

B. an eligible infrastructure entity;

 

 

 

C. an eligible Alternate Investment Fund;

 

 

 

D. an eligible domestic company; or

 

 

 

E. an eligible Non-banking Financial Company;

 

 

 

iv. if any difficulty arises in interpreting or implementing the provisions, the Board may issue guidelines;

 

 

 

v. such guidelines shall be––

 

 

 

A. issued with the previous approval of the Central Government;

 

 

 

B. laid before each House of Parliament; and

 

 

 

C. binding on the Income-tax Authority and the specified person;

 

 

 

d. where any income has not been included in the total income of the specified person, and subsequently during any tax year the specified person fails to satisfy any of these conditions so that the said income would not have been eligible for such non-inclusion, such income shall be chargeable to income-tax as the income of the specified person of that tax year;

 

 

 

e. where an eligible Alternate Investment Fund has investment of less than 100% in one or more of eligible infrastructure entity or eligible domestic company or eligible Non-Banking Financial Company or in an eligible InvIT, income accrued or arisen or received or attributable to such investment, directly or indirectly, which is exempt herein shall be calculated proportionately to that investment made in one or more of the eligible infrastructure entity or eligible domestic company or eligible Non- Banking Financial Company or in an eligible InvIT, in such manner as may be prescribed;

 

 

 

f. where an eligible domestic company has investment of less than 100% in one or more of the eligible infrastructure entity, income accrued or arisen or received or attributable to such investments, directly or indirectly, which is exempt herein shall be calculated proportionately to the investment made in one or more of the eligible infrastructure entity, in such manner, as may be prescribed;

 

 

 

g. where an eligible Non-Banking Financial Company has lending of less than 100% in one or more of the eligible infrastructure entity, income accrued or arisen or received or attributable to such lending, directly or indirectly, which is exempt herein shall be calculated proportionately to the lending made in eligible infrastructure entity, in such manner, as may be prescribed;

 

 

 

h. in case a sovereign wealth fund or pension fund has loans or borrowings, directly or indirectly, for the purposes of making investment in India, such fund shall be deemed to be not eligible for exclusion from total income.

8

Any income falling under section 10(23F) and (23FA) of the Income-tax Act, 1961 (43 of 1961), subject to the conditions as specified therein.

 

 

 

Note 1.—For the purposes of Sl. Nos. 1 and 2, the expression “investment fund” shall have the meaning assigned to it in section 224(10)(a).

Note 2.—For the purposes of Sl. No. 3, the expression “special purpose vehicle” means an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the law under which such trust is granted registration.

Note 3.—For the purposes of Sl. Nos. 4 and 5, the expression “real estate asset” shall have the same meaning as assigned to it in regulation 2(1)(zj) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).

Note 4.—For the purposes of Sl. No. 6,––

(a) “venture capital company” means a company which—

(i) has been granted a certificate of registration, before the 21st May, 2012, as a Venture Capital Fund and is regulated under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 (herein referred to as the Venture Capital Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or

(ii) has been granted a certificate of registration as Venture Capital Fund as a sub-category of Category I Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (herein referred to as the Alternative Investment Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and which fulfils the following conditions:—

(A) it is not listed on a recognised st