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Core Purpose

This notification introduces the Income-tax (Twentieth Amendment) Rules, 2025, to further amend the Income-tax Rules, 1962, specifically rule 21AK, to include 'over-the-counter derivatives' and clarify provisions related to 'Foreign Portfolio Investors'.

Detailed Summary

The Ministry of Finance, Department of Revenue, through the Central Board of Direct Taxes, issued Notification No. 126/2025, G.S.R. 503(E), on 28th July, 2025, exercising powers under section 295 read with clause (4E) of section 10 of the Income-tax Act, 1961 (43 of 1961). These rules, titled the Income-tax (Twentieth Amendment) Rules, 2025, amend the Income-tax Rules, 1962, and come into force on their publication date in the Official Gazette. Specifically, in rule 21AK, sub-rule (1), clause (b)(i) is amended to insert 'or over-the-counter derivatives' after 'offshore derivative instruments'. Sub-rule (1), clause (b)(ii) is amended to insert 'or any Foreign Portfolio Investor being a unit of an International Financial Services Centre' after 'by the International Financial Services Centres Authority'. Sub-rule (2) is amended to insert 'or the Foreign Portfolio Investor' after 'offshore banking unit'. Furthermore, the Explanation to rule 21AK is updated: clause (v) is modified, clause (vi) has 'and' inserted at the end, and a new clause (vii) is inserted, defining 'Foreign Portfolio Investor' as a person registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). The Income-tax Rules, 1962, were originally published vide S.O. 969 (E), dated 26th March, 1962, and last amended vide G.S.R. 322 (E), dated 19.05.2025.

Full Text

REGD. No. D. L.-33004/99 The Gazette of India CG-DL-E-28072025-265047 EXTRAORDINARY PART II—Section 3—Sub-section (i) PUBLISHED BY AUTHORITY No. 460] NEW DELHI, MONDAY, JULY 28, 2025/SHRAVANA 6, 1947 MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 28th July, 2025 No. 126/2025 G.S.R. 503(E). — In exercise of the powers conferred by section 295 read with clause (4E) of section 10 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. (1) These rules may be called the Income-tax (Twentieth Amendment) Rules, 2025. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962, in rule 21AK, — (a) in sub-rule (1), clause (b),— (i) in the opening portion, after the words "offshore derivative instruments", the words “or over-the-counter derivatives" shall be inserted; (ii) in sub-clause (i), after the words "by the International Financial Services Centres Authority", the words "or any Foreign Portfolio Investor being a unit of an International Financial Services Centre" shall be inserted; (b) in sub-rule (2), after the words "offshore banking unit", the words "or the Foreign Portfolio Investor" shall be inserted. (c) in the Explanation, - (i) in clause (v), for the words "a purchaser and a seller; and", the words "a purchaser and a seller;" shall be substituted; (ii) in clause (vi), the word "and" shall be inserted at the end; and (iii) after clause (vi,) the following clause shall be inserted, namely:- '(vii), "Foreign Portfolio Investor" means a person registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).'. [F. No. 370142/26/2025-TPL] SAMUEL PITTA, Dy. Secy. Note: -The Income-tax Rules, 1962 were published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number S.O. 969 (E), dated the 26th March, 1962 and was last amended vide number G.S.R. 322 (E), dated the 19.05.2025. 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. SARVESH KUMAR Digitally signed by SARVESH KUMAR SRIVASTAVA Date: 2025:07.28 22:06:10+0530

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