CBDT has amended the list of jurisdictions for defining ‘Passive Non- Financial Entities’


Central Board of Direct Taxes (CBDT) has issued a notification amending the list of jurisdictions based upon which it defines a Passive Non- Financial Entity. This notification was issued on 6th April, 2023.

One of the definitions provided for a Passive Non- Financial Entity under the Income Tax Rules, 1962 is “an investment entity described in sub-clause (B) of clause (c) of the Explanation to clause (3), which is not located in any of the jurisdictions specified by the Central Board of Direct Taxes in this behalf

Pertinently, sub-clause (B) of clause (c) of the Explanation to clause (3) defines an “investment entity” as an entity whose gross income is primarily attributable to investing, reinvesting, or trading in financial assets, if the entity is managed by another entity that is a depository institution, a custodial institution, a specified insurance company, or an investment entity mentioned in sub-clause (A) of this clause.

Hence, such an investment entity that is not located in any of the notified jurisdictions will be termed as a passive non-financial entity.

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