Page 20 - Union Budget_2019

Union Budget 2019

3.3 Exemption of specified transfer by Category III Alternative Investment Fund (AIF)

As per Section 47, capital gains shall be exempt from transfer of bond or Global Depository Receipt ("GDR")

or rupee denominated bond of Indian Company or derivative, made on a recognised stock exchange by non-
resident located in IFSC and where consideration is paid or payable in foreign currency.

It is proposed to include transfer of securities by Category III AIF registered under the regulations of SEBI,
located in IFSC

of which all unit holders are non-resident and deriving income solely in convertible foreign exchange,
within the ambit of exemption subject to fulfilment of specified conditions. Further, the capital asset shall

include the securities notified by Central Government in this behalf.

"Securities" shall include

• shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like

nature in or of any incorporated company or other body corporate
• derivative

• units or any other instrument issued by any collective investment scheme to the investors in such
schemes;

• security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002

• units or any other such instrument issued to the investors under any mutual fund scheme;
• Government securities

• such other instruments as may be declared by the Central Government to be securities; and
• rights or interest in securities

The above amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the

assessment year2020-21 and subsequent assessment years.

3.4 Incentives for Category II Alternative Investment Fund (AIF)

Section 56 states that

• If a closely held company issues shares to a resident,
• Receives consideration that exceeds face value of shares and

• Aggregate consideration that exceeds the fair market value of shares shall be charged to tax
• In the hands of such closely held company

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