The Central Board of Direct Taxes vide notification dated 27th May, 2020 has issued the Income-tax (10th Amendment) Rules, 2020. The Rule 10V that provides the guidelines for application of Section 9A has been amended. The Section provides that an eligible investment fund shall not be said to be resident in India merely because the eligible fund manager, undertaking fund management activities on its behalf, is situated in India.
The amendment provides that the sub-rule (5) to sub-rule (10) which provides rights and duties of eligible fund manager shall not apply on or after the 1st day of April, 2019. it also provides that the amount of remuneration to be paid by the fund to a fund manager shall be 10 per cent of the asset under management for Category-I Foreign Portfolio Investor.
In other cases, the amount of remuneration shall be 0.30 per cent. of the asset under management, 10 per cent. of profits derived by the fund in excess of the specified hurdle rate from the fund management activity undertaken by the fund manager, where it is entitled only to remuneration linked to the income or profits derived by the fund or 50 per cent. of the management fee, whether in the nature of fixed charge or linked to the income or profits derived by the fund from the management activity undertaken by the fund manager, paid by such fund in respect of the fund management activity undertaken by the fund manager as reduced by the amount incurred towards operational expenses including distribution expenses,
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