As per Explanation 5 to Section 9(1)(i), an asset or capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be situated in India if the share or interest derives its value substantially from the assets located in India.
Second proviso to said Explanation provides that the said Explanation shall not apply to an asset or capital asset, held by a non-resident by way of investment, in Category-I or Category-Il Foreign Portfolio Investor under the SEBI (Foreign Portfolio Investors) Regulations, 2014. Recently, SEBI (FPI) Regulations, 2019 has substituted the previous SEBI (FPI) Regulations, 2014.
The Finance Bill, 2020 proposes the consequential amendment to Section 9 on basis of new provisions prescribed in SEBI (FPI) Regulations, 2019 and restricts the applicability of above exception to only Category-I Foreign Portfolio Investors. |
