Rule 157 — Persons exempt from obtaining Permanent Account Number under section 262. Made under s.262 of the Income-tax Act, 2025.
Rule 157 gives effect to Section 262 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) disapplies section 262 for a non-resident, not being a company or a foreign company, who has during a tax year made investment in a specified fund, on three conditions: that he earns no income in India during the tax year other than income from the investment in the specified fund; that the income-tax due on that income is deducted at source and remitted to the Central Government by the specified fund at the rates specified in section 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14]; and that he furnishes to the specified fund his name, e-mail id and contact number, his address in the country or specified territory outside India of which he is a resident, a declaration that he is a resident of that country or specified territory, and his Tax Identification Number there or, where no such number is available, a unique number by which the government of that country or territory identifies him.
Sub-rule (2) puts two obligations on the specified fund: to furnish a quarterly statement in Form No. 92, electronically, to the Director General of Income-tax (Systems) or a person authorised by him, for the quarter of the financial year in which the details and documents are received; and to upload the declaration of foreign residency within fifteen days from the end of the quarter of the financial year to which the statement relates.
Sub-rule (3) disapplies section 262 for a non-resident who is an eligible foreign investor and who has transacted only in capital assets referred to in section 70(1)(r) which are listed on a recognised stock exchange located in any International Financial Services Centre, where the consideration on transfer is paid or payable in foreign currency. The conditions are that he earns no income in India other than income from the transfer of such a capital asset, and that he furnishes the same set of details and documents — name, e-mail id and contact number, foreign address, declaration of residence, and Tax Identification Number or equivalent unique number — to the stock broker through which the transaction is made.
Sub-rule (4) puts the same two obligations on the stock broker: the quarterly Form No. 92 statement to the Director General of Income-tax (Systems) or a person authorised by him, and uploading the foreign residency declaration within fifteen days from the end of the quarter to which the statement relates.
Sub-rule (5) defines the terms. "Eligible foreign investor" means a non-resident who operates in accordance with the Securities and Exchange Board of India Circular imd/ho/fpic/cir/P/2017/003 dated 4th January, 2017. "International Financial Services Centre" takes its meaning from section 2(q) of the Special Economic Zones Act, 2005. "Specified fund" means a fund established or incorporated in India as a trust, company, limited liability partnership or body corporate which holds a certificate of registration as a Category I or Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 or under the International Financial Services Centres Authority (Fund Management) Regulations, 2022 and is located in an International Financial Services Centre; or any fund referred to in Schedule VI [Note 1(g)] to the Act. "Stock broker" means a person having trading rights in a recognised stock exchange located in any International Financial Services Centre and a member of that exchange.
Section 262 requires a Permanent Account Number, which is a heavy obligation for a foreign investor whose only connection with India is a fund investment or a trade on an exchange in an International Financial Services Centre. The rule relieves that class, but only by substituting an equivalent trail: the tax is collected at source by the fund or is confined to the transactions the exemption covers, the investor identifies himself with a foreign Tax Identification Number and a residency declaration, and the fund or the stock broker reports quarterly in Form No. 92. The exemption is from the number, not from the reporting.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to upload the declaration of foreign residency by the specified fund | Fifteen days | From the end of the quarter of the financial year to which the Form No. 92 statement relates | Sub-rule (2)(b) |
| Time to upload the foreign residency declaration by the stock broker | Fifteen days | From the end of the quarter of the financial year to which the Form No. 92 statement relates | Sub-rule (4)(b) |
| Rates at which the specified fund must deduct and remit the tax | The rates specified in section 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14] | A pointer to the rates in those Table entries; the rule states no rate of its own | Sub-rule (1)(b) |
The exemption is conditional and fragile: it fails the moment the non-resident has any other income in India, because sub-rules (1)(a) and (3)(a) are drawn as an absolute bar on other Indian income, not as a threshold. It also depends on someone else's compliance — the specified fund's deduction and remittance under sub-rule (1)(b) and, in both limbs, the quarterly Form No. 92 and the fifteen-day upload of the residency declaration — so a non-resident who has furnished everything to the fund or broker is still outside the exemption if the tax is not deducted and remitted. The rule prescribes no rate of its own: sub-rule (1)(b) points to the rates in section 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14], and those Table entries govern. Note also that sub-rule (1) is confined to a non-resident not being a company or a foreign company, while sub-rule (3) turns instead on being an eligible foreign investor as defined by the Securities and Exchange Board of India circular of 4th January, 2017.
An individual resident abroad invests in a Category II Alternative Investment Fund located in an International Financial Services Centre and has no other income in India. He gives the fund his name, e-mail id, contact number, foreign address, a declaration of foreign residency and his Tax Identification Number; the fund deducts and remits the tax at the rates in the section 393 Table entries and files Form No. 92 for the quarter in which it received those details, uploading the residency declaration within fifteen days of the end of that quarter. Section 262 then does not apply to him. If in the same tax year he also earns rent from a property in India, the condition in sub-rule (1)(a) fails.
A non-resident meets the rule in the declaration and Tax Identification Number he gives to the fund or to the stock broker; the fund and the broker meet it every quarter in Form No. 92 and in the upload of the residency declarations.
such non-resident does not earn any income in India other than the income from the investment in the specified fund during the tax year
upload the declaration of foreign residency as referred to in sub-rule (1)(c)(iii) within fifteen days from the end of the quarter of the financial year to which such statement relates