We want to move an offshore fund's assets into a GIFT City vehicle and issue units in the new fund to the existing investors. Does that trigger capital gains, either for the fund or for the investors?
Not if it is a 'relocation' as the Act defines it. Section 47(viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45; section 47(viiad) does the same for any transfer by a shareholder, unit holder or interest holder, in a relocation, of a capital asset being a share, unit or interest held by him in the original fund in consideration for a share, unit or interest in the resultant fund. The two clauses therefore cover both legs — the fund's transfer of its assets and the investors' exchange of their holdings.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Section 47(viiac) and (viiad) of the Income-tax Act, 1961, with the Explanation applicable to both, as amended up to 2025; the relocation deadline substituted by Act No. 7 of 2025, with effect from 1 April 2025. It bears on section 47(viiac), section 47(viiad), section 45, section 80LA(1A), section 90, section 90A, section 9A of the Income Tax Act 1961, in Capital Gains and Capital Gains Exemptions matters.
Everything turns on the defined word 'relocation', and it carries a hard deadline. The Explanation defines relocation as the transfer of the assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund ON OR BEFORE 31 MARCH 2030, where the consideration is discharged in the form of a share, unit or interest in the resulting fund, either to the shareholders, unit holders or interest holders of the original fund in the same proportion in which they held their interest in the original fund, or to the original fund itself in that same proportion where the resultant fund does not issue directly to the holders. The Department's footnote records that the figure was substituted for '2025' by Act No. 7 of 2025 with effect from 1 April 2025, and that '2025' had earlier been substituted for '2023' by Act No. 8 of 2023 with effect from 1 April 2023 — so an opinion written before those changes will state a cut-off that has moved twice. The 'original fund' definition has three limbs and the first is a set of four conditions closely tracking section 9A(3): not resident in India, resident of a treaty country or a notified country, subject to applicable investor protection regulations where it is established, and fulfilling such other conditions as may be prescribed. The second limb is specific — an investment vehicle in which the Abu Dhabi Investment Authority is the direct or indirect sole shareholder, unit holder, beneficiary or interest holder and which is wholly owned and controlled by that Authority or the Government of Abu Dhabi — and the third is a fund notified by the Central Government. The 'resultant fund' definition is changing: the version in force requires a fund established or incorporated in India as a trust, company or limited liability partnership which is registered as a Category I, II or III Alternative Investment Fund under the SEBI AIF Regulations 2012 or regulated under the IFSCA (Fund Management) Regulations 2022, and located in an IFSC as referred to in section 80LA(1A); the Department's page records that this definition is to be SUBSTITUTED by the Finance Act 2025 with effect from 1 April 2026 by a wider one that also admits a certificate as a retail scheme or as an Exchange Traded Fund.
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Not a case. The Explanation applicable to clauses (viiac) and (viiad) defines three terms. 'Original fund' means (A) a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit and fulfils the conditions that (i) the fund is not a person resident in India, (ii) the fund is a resident of a country or specified territory with which an agreement under section 90(1) or section 90A(1) has been entered into, or is established or incorporated or registered in a country or specified territory as may be notified, (iii) the fund and its activities are subject to applicable investor protection regulations in the country or specified territory where it is established or incorporated or is a resident, and (iv) it fulfils such other conditions as may be prescribed; or (B) an investment vehicle in which the Abu Dhabi Investment Authority is the direct or indirect sole shareholder or unit holder or beneficiary or interest holder and which is wholly owned and controlled, directly or indirectly, by that Authority or the Government of Abu Dhabi; or (C) a fund notified by the Central Government in the Official Gazette subject to such conditions as may be specified. 'Relocation' means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before 31 March 2030, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund to (i) the shareholder, unit holder or interest holder of the original fund, in the same proportion in which the share, unit or interest was held by him in the original fund, in lieu of his shares, units or interests in the original fund, or (ii) the original fund, in that same proportion, in respect of which the share, unit or interest is not issued by the resultant fund to its shareholder, unit holder or interest holder. 'Resultant fund' means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership which (i) has been granted a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund and is regulated under the SEBI (Alternative Investment Funds) Regulations 2012 or regulated under the International Financial Services Centres Authority (Fund Management) Regulations 2022, and (ii) is located in any International Financial Services Centre as referred to in section 80LA(1A). The Department's page records that this definition of 'resultant fund' is to be substituted by the Finance Act 2025 with effect from 1 April 2026 by a definition which additionally admits a fund granted a certificate as a retail scheme or as an Exchange Traded Fund.
Clause (viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45. Clause (viiad) provides that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund is likewise not regarded as a transfer. Both clauses depend on the transaction answering the definition of 'relocation' in the Explanation, which requires the transfer of the assets to be made on or before 31 March 2030 and the consideration to be discharged in shares, units or interests in the resulting fund in the same proportion as the holders' interests in the original fund.
Not a judicial route. Moving an existing offshore fund into an Indian International Financial Services Centre involves two disposals that would each be chargeable: the fund disposes of its portfolio to the new vehicle, and every investor disposes of his holding in the old fund in exchange for a holding in the new one. Either charge alone would make relocation impossible, and the second would fall on investors who have realised nothing. The Act therefore uses the same device it uses for amalgamations and demergers — taking the transaction outside the definition of transfer rather than exempting the gain — and attaches the conditions that make it a true continuation rather than a realisation: the consideration must be paper in the new vehicle, not cash, and it must be issued in the same proportions, so that no investor changes his economic position. The time limit exists because the provision is an inducement to relocate within a policy window rather than a permanent rollover, and it has been extended twice, as the Department's footnote records.
"relocation" means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before the 31st day of March, 2030, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund
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Handle my notice → Ask a CA on WhatsAppNot if it is a 'relocation' as the Act defines it. Section 47(viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45; section 47(viiad) does the same for any transfer by a shareholder, unit holder or interest holder, in a relocation, of a capital asset being a share, unit or interest held by him in the original fund in consideration for a share, unit or interest in the resultant fund. The two clauses therefore cover both legs — the fund's transfer of its assets and the investors' exchange of their holdings. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 47(viiac), section 47(viiad), section 45, section 80LA(1A), section 90, section 90A, section 9A of the Income Tax Act 1961. It is reported as Section 47(viiac) and (viiad) of the Income-tax Act, 1961, with the Explanation applicable to both, as amended up to 2025; the relocation deadline substituted by Act No. 7 of 2025, with effect from 1 April 2025. Everything turns on the defined word 'relocation', and it carries a hard deadline. The Explanation defines relocation as the transfer of the assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund ON OR BEFORE 31 MARCH 2030, where the consideration is discharged in the form of a share, unit or interest in the resulting fund, either to the shareholders, unit holders or interest holders of the original fund in the same proportion in which they held their interest in the original fund, or to the original fund itself in that same proportion where the resultant fund does not issue directly to the holders. The Department's footnote records that the figure was substituted for '2025' by Act No. 7 of 2025 with effect from 1 April 2025, and that '2025' had earlier been substituted for '2023' by Act No. 8 of 2023 with effect from 1 April 2023 — so an opinion written before those changes will state a cut-off that has moved twice. The 'original fund' definition has three limbs and the first is a set of four conditions closely tracking section 9A(3): not resident in India, resident of a treaty country or a notified country, subject to applicable investor protection regulations where it is established, and fulfilling such other conditions as may be prescribed. The second limb is specific — an investment vehicle in which the Abu Dhabi Investment Authority is the direct or indirect sole shareholder, unit holder, beneficiary or interest holder and which is wholly owned and controlled by that Authority or the Government of Abu Dhabi — and the third is a fund notified by the Central Government. The 'resultant fund' definition is changing: the version in force requires a fund established or incorporated in India as a trust, company or limited liability partnership which is registered as a Category I, II or III Alternative Investment Fund under the SEBI AIF Regulations 2012 or regulated under the IFSCA (Fund Management) Regulations 2022, and located in an IFSC as referred to in section 80LA(1A); the Department's page records that this definition is to be SUBSTITUTED by the Finance Act 2025 with effect from 1 April 2026 by a wider one that also admits a certificate as a retail scheme or as an Exchange Traded Fund. If it applies to you, the first step is this: Fix the completion date for the transfer of assets first — the relocation must be effected on or before 31 March 2030, and a relocation completed after that date is outside the clauses entirely.
Not a case. The Explanation applicable to clauses (viiac) and (viiad) defines three terms. 'Original fund' means (A) a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit and fulfils the conditions that (i) the fund is not a person resident in India, (ii) the fund is a resident of a country or specified territory with which an agreement under section 90(1) or section 90A(1) has been entered into, or is established or incorporated or registered in a country or specified territory as may be notified, (iii) the fund and its activities are subject to applicable investor protection regulations in the country or specified territory where it is established or incorporated or is a resident, and (iv) it fulfils such other conditions as may be prescribed; or (B) an investment vehicle in which the Abu Dhabi Investment Authority is the direct or indirect sole shareholder or unit holder or beneficiary or interest holder and which is wholly owned and controlled, directly or indirectly, by that Authority or the Government of Abu Dhabi; or (C) a fund notified by the Central Government in the Official Gazette subject to such conditions as may be specified. 'Relocation' means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before 31 March 2030, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund to (i) the shareholder, unit holder or interest holder of the original fund, in the same proportion in which the share, unit or interest was held by him in the original fund, in lieu of his shares, units or interests in the original fund, or (ii) the original fund, in that same proportion, in respect of which the share, unit or interest is not issued by the resultant fund to its shareholder, unit holder or interest holder. 'Resultant fund' means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership which (i) has been granted a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund and is regulated under the SEBI (Alternative Investment Funds) Regulations 2012 or regulated under the International Financial Services Centres Authority (Fund Management) Regulations 2022, and (ii) is located in any International Financial Services Centre as referred to in section 80LA(1A). The Department's page records that this definition of 'resultant fund' is to be substituted by the Finance Act 2025 with effect from 1 April 2026 by a definition which additionally admits a fund granted a certificate as a retail scheme or as an Exchange Traded Fund. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Clause (viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45. Clause (viiad) provides that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund is likewise not regarded as a transfer. Both clauses depend on the transaction answering the definition of 'relocation' in the Explanation, which requires the transfer of the assets to be made on or before 31 March 2030 and the consideration to be discharged in shares, units or interests in the resulting fund in the same proportion as the holders' interests in the original fund.
Not a judicial route. Moving an existing offshore fund into an Indian International Financial Services Centre involves two disposals that would each be chargeable: the fund disposes of its portfolio to the new vehicle, and every investor disposes of his holding in the old fund in exchange for a holding in the new one. Either charge alone would make relocation impossible, and the second would fall on investors who have realised nothing. The Act therefore uses the same device it uses for amalgamations and demergers — taking the transaction outside the definition of transfer rather than exempting the gain — and attaches the conditions that make it a true continuation rather than a realisation: the consideration must be paper in the new vehicle, not cash, and it must be issued in the same proportions, so that no investor changes his economic position. The time limit exists because the provision is an inducement to relocate within a policy window rather than a permanent rollover, and it has been extended twice, as the Department's footnote records. In the words reproduced by the source cited on this page: ""relocation" means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before the 31st day of March, 2030, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Section 47(viiac) and (viiad) of the Income-tax Act, 1961, with the Explanation applicable to both, as amended up to 2025; the relocation deadline substituted by Act No. 7 of 2025, with effect from 1 April 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 47(viiac), section 47(viiad), section 45, section 80LA(1A), section 90, section 90A, section 9A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Clause (viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45. Clause (viiad) provides that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund is likewise not regarded as a transfer. Both clauses depend on the transaction answering the definition of 'relocation' in the Explanation, which requires the transfer of the assets to be made on or before 31 March 2030 and the consideration to be discharged in shares, units or interests in the resulting fund in the same proportion as the holders' interests in the original fund. It arises in Capital Gains and Capital Gains Exemptions matters, on section 47(viiac), section 47(viiad), section 45, section 80LA(1A), section 90, section 90A, section 9A of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Test the transferring fund against the 'original fund' definition: the first limb requires all four conditions — non-residence, residence in a treaty or notified country, subjection to applicable investor protection regulations where it is established, and such other conditions as may be prescribed. Test the receiving vehicle against the 'resultant fund' definition applicable to the year in issue, and note that a wider definition, admitting a retail scheme or an Exchange Traded Fund certificate, is recorded on the Department's page as being substituted with effect from 1 April 2026. Check that the resultant fund is located in an International Financial Services Centre as referred to in section 80LA(1A) — the definition requires location, not merely registration. Structure the consideration exactly as the definition requires: shares, units or interests in the resulting fund, issued in the SAME PROPORTION in which the holders held in the original fund, either to the holders directly or to the original fund where the resultant fund does not issue to the holders. Cover both legs in the documentation — the fund's transfer of assets under clause (viiac) and the investors' exchange of their holdings under clause (viiad) — because they are separate clauses and each has to be satisfied on its own terms. Where the assets are held through a special purpose vehicle, note that the definition expressly contemplates a transfer of the assets of the original fund 'or of its wholly owned special purpose vehicle'.
Still good law. Validity has not been fully checked. The clauses and their Explanation were taken in a single continuous reading of clauses (vii) to (viii) of section 47, which is how it was established that no clause in that stretch was skipped or mislabelled, and the footnote list carried with the section records the substitution of the relocation deadline by Act No. 7 of 2025 with effect from 1 April 2025. No second text of section 47 has been compared for these clauses. Section 80LA(1A), to which the 'resultant fund' definition refers for the meaning of an International Financial Services Centre location, is taken from section 80LA itself. The substituted definition of 'resultant fund' takes effect from 1 April 2026 and is not the definition in force for earlier years, so a relocation completed before that date is tested against the narrower definition. No judicial decision construing section 47(viiac) or (viiad) is recorded. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is a statutory entry, not a decision. The decided_on value, 1 April 2025, is the commencement date the Department's own footnote to section 47 gives for the current form of the relocation deadline — 'Sub. for "2025" by Act No. 7 of 2025, w.e.f. 1-4-2025. Earlier "2025" was sub. for "2023" by Act No. 08 of 2023, w.e.f. 1-4-2023' — and not a decision date. The Department prints Act numbers only, not popular names, and nothing here goes behind them. The insertion dates of clauses (viiac) and (viiad) themselves are not established, because the footnote markers do not appear inline in the clause text and no particular footnote can therefore be attributed to a particular clause. Clause (23FF) of section 10, the companion exemption for capital gains on relocation, is NOT set out here and nothing is said about it in this entry; a reader relying on the relocation relief should read that clause for himself, because section 47 answers only the question whether there is a transfer. The prospective substitution of the 'resultant fund' definition is reported exactly as the Act carries it: 'Following clause (c) of the Explanation to clause (viiad) of section 47 shall be substituted by the Finance Act, 2025, w.e.f. 1-4-2026'. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Clause (viiac) provides that any transfer, in a relocation, of a capital asset by the original fund to the resulting fund is not regarded as a transfer for the purposes of section 45. Clause (viiad) provides that any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund is likewise not regarded as a transfer. Both clauses depend on the transaction answering the definition of 'relocation' in the Explanation, which requires the transfer of the assets to be made on or before 31 March 2030 and the consideration to be discharged in shares, units or interests in the resulting fund in the same proportion as the holders' interests in the original fund.
TaxSphere, “Statutory position — section 47(viiac) and (viiad): relocating an offshore fund into an IFSC is not a transfer, if it is done by 31 March 2030”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-47-viiac-viiad-relocation-of-a-fund-to-an-ifsc/ (validity last checked 2026-09-08)
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