[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—
(a) transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives; or
(b) distribution of income on offshore derivative instruments [or over-the-counter derivatives],
under clause (4E) of section 10 of the Act, shall be exempted subject to fulfilment of the following conditions, namely:—
(i) the non-deliverable forward contract or offshore derivative instrument or over-the-counter derivative 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 [or any Foreign Portfolio Investor being a unit of an International Financial Services Centre]; and
(ii) such contract, instrument or derivative is not entered into by the non-resident through or on behalf of its permanent establishment in India.]
(2) The offshore banking unit [or the Foreign Portfolio Investor] 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) "derivative" shall have the same meaning as assigned to it in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(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;
(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;
(iv) "offshore derivative instrument" shall have the same meaning as assigned to it in clause (o) of sub-regulation (1) of regulation 2 of the SEBI (Foreign Portfolio Investors) Regulations, 2019;
(v) "over-the-counter derivatives" shall mean a derivative contract that is not traded on an exchange but instead is privately negotiated between [a purchaser and a seller;]
(vi) "permanent establishment" shall have the meaning as assigned to it in clause (iiia) of section 92F of the Act.] [and]]
87a[(vii(87a[(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).]