Ministry of Finance
Notification No. 136/2021 [F. No. 370142/53/2021-TPL (Part-II)] / G.S.R. 851(E) was published on 10 December 2021. Its subject is Ministry of Finance.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
The Income-tax (33rd Amendment) Rules, 2021, made under clause (4E) of section 10 read with section 295, insert a new rule 21AK after rule 21AJ. Sub-rule (1) provides that income accruing or arising to, or received by, a non-resident from the transfer of non-deliverable forward contracts is exempt under section 10(4E) subject to two conditions: the contract must be entered into by the non-resident with an offshore banking unit of an International Financial Services Centre holding a valid certificate of registration under the International Financial Services Centres Authority (Banking) Regulations, 2020; and the contract must not be entered into through or on behalf of the non-resident's permanent establishment in India. Sub-rule (2) puts on the offshore banking unit the duty to ensure that the second condition is complied with. The Explanation gives "permanent establishment" the meaning in clause (iiia) of section 92F, defines a non-deliverable forward contract as a contract for the difference between an exchange rate agreed beforehand and the actual spot rate at maturity, the spot rate being the domestic or a market determined rate and the contract being settled by a single payment in a foreign currency, and defines "offshore banking unit" as a banking branch unit located in an International Financial Services Centre as referred to in sub-section (1A) of section 80LA.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 10th December, 2021
INCOME-TAX
G.S.R. 851(E).—In exercise of the powers conferred by clause (4E) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:─1. Short title and commencement.—(1) These rules may be called the Income-tax (33rd Amendment) Rules, 2021.
(2) They shall come into force from the date of their publication in the Official Gazette.2. In the Income-tax Rules, 1962, after rule 21AJ, the following rule shall be inserted, namely:—
"21AK. Conditions for the purpose of clause (4E) of section 10.- (1) The income accrued or arisen to, or received by, a non-resident as a result of transfer of non-deliverable forward contracts under clause (4E) of section 10 of the Act, shall be exempted subject to fulfillment of the following conditions, namely:─
(i) the non-deliverable forward contract is entered into by the non-resident with an offshore banking unit of an International Financial Services Centre which holds a valid certificate of registration granted under International Financial Services Centres Authority (Banking) Regulations, 2020 by the International Financial Services Centres Authority; and
(ii) such contract is not entered into by the non-resident through or on behalf of its permanent establishment in India.
(2) The offshore banking unit shall ensure that the condition provided in clause (ii) of sub-rule (1) is complied with.Explanation.- For the purpose of this rule, the expression,-
(i) "permanent establishment" shall have the meaning assigned to it in clause (iiia) of section 92F;
(ii) "a non-deliverable forward contract" shall mean a contract for the difference between an exchange rate agreed before and the actual spot rate at maturity, with the spot rate being taken as the domestic rate or a market determined rate and such contract being settled with a single payment in a foreign currency; and
(iii) "offshore banking unit" means a banking branch Unit located in an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA of the Act.".[Notification No. 136/2021/F. No. 370142/53/2021-TPL (Part-II)]
UMME FARDINA ADIL, Under Secy.Note : The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Subsection (ii), vide notification number S.O. 969 (E) dated the 26th March, 1962 and were last amended vide notification number G.S.R. 831(E) dated 23rd November, 2021.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.
The date of publication in the Official Gazette.
In a non-resident's claim to exemption under section 10(4E), and in the offshore banking unit's records of the contracts it has entered into.
Rules it names. Rule 21AJ of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
← Notification No. 137/2021 [F.No. 370142/57/2021-TPL(Part-I)] / SO 5187(E) · Notification No. 135/2021 [F. No. 503/07/95-FTD-II] / SO 5094(E) →
Source: the Income Tax Department’s own published text — its page for this instrument.
