[SCHEDULE I
[See section 9(12)]
CONDITIONS FOR CERTAIN ACTIVITIES NOT TO CONSTITUTE BUSINESS CONNECTION IN INDIA
1. (1) The eligible investment fund referred to in section 9(12) shall be a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit, and fulfils the following conditions:—
(a) the fund is not a person resident in India;
(b) the fund is—
(i) a resident of a country or a specified territory with which an agreement referred to in section 159(1) or (2) has been entered into; or
(ii) established or incorporated or registered in a country or a specified territory as the Central Government may, by notification, specify;
(c) the aggregate participation or investment in the fund, directly by persons resident in India, does not exceed 5% of the corpus of the fund as on the 1st April and the 1st October of the tax year, and—
(i) for the purposes of calculation of such aggregate participation or investment in the fund, any contribution up to twenty-five crore rupees made by the eligible fund manager during the first three years of operation of the fund shall not be taken into account; or
(ii) where the said aggregate participation or investment in the fund exceeds 5% on the 1st April or the 1st October of the tax year, the condition mentioned in this clause shall be deemed to be satisfied, if it is satisfied within four months of the 1st April or the 1st October, as the case may be, of such tax year;
(d) the fund shall not carry on or control and manage, directly or indirectly, any business in India; and
(e) no person acting on behalf of the fund engages in any activity which constitutes a business connection in India other than the activities undertaken by the eligible fund manager on its behalf.
(2) The eligible fund manager referred to in section 9(12), in respect of an eligible investment fund, shall be any person who is engaged in the activity of fund management and fulfils the following conditions:—
(a) the person is not an employee of the eligible investment fund or a connected person of such fund;
(b) the person is registered as a fund manager or an investment advisor in accordance with the specified regulations;
(c) the person is acting in the ordinary course of his business as a fund manager; and
(d) the person along with his connected persons shall not be entitled, directly or indirectly, to more than 20% of the profits accruing or arising to the eligible investment fund from the transactions carried out by the fund through the fund manager.
(3) Every eligible investment fund shall, in respect of its activities in a tax year, furnish within ninety days from the end of the tax year,—
(a) a statement in the prescribed form to the prescribed income-tax authority containing information relating to the fulfilment of the conditions specified in this Schedule; and
(b) provide such other relevant information or documents, as may be prescribed.
(4) The provisions of this Schedule shall apply as per such guidelines and in such manner, as the Board may prescribe in this behalf.
2. In this Schedule, the expressions—
(a) "connected person" shall have the meaning assigned to it in section 184(5);
(b) "corpus" means the total amount of funds raised for the purpose of investment by the eligible investment fund as on a particular date;
(c) "specified regulations" means—
(i) the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013; or
(ii) the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020; or
(iii) such other regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), as may be notified in this behalf.]