CBDT amends Rules to allow Infrastructure Debt Fund to issue Zero Coupon Bonds

The Central Board of Direct Taxes (CBDT) vide Notification No. 28/2022 dated 6th April 2022 amends Rules to allow Infrastructure Debt Fund to issue ‘Zero Coupon Bonds’.

The Notification is Given Below:

G.S.R. 275(E).—In exercise of the powers conferred by clause (48) of section 2 and clause (47) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (8th Amendment) Rules, 2022.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), in rule 2F, for sub-rule (3) and (4), the following sub-rules shall be substituted, namely:─

“(3) The Infrastructure Debt Fund shall issue,-

(i) rupee denominated bonds or foreign currency bonds in accordance with the directions of Reserve Bank of India and the relevant regulations under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time; or

(ii) zero coupon bonds in accordance with rule 8B.

(4) The terms and conditions of a bond issued by the Infrastructure Debt Fund, ─

(i) under clause (i) of sub-rule (3) shall be in accordance with the directions of the Reserve Bank of India and the regulations referred to in the said clause ; or

(ii) under clause (ii) of sub-rule (3) shall be in accordance with rule 8B.”

3. In the principal rules, in rule 8B, ─

(a) in sub-rule (1),-

(i) for the words “infrastructure capital fund”, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;

(ii) for the proviso, the following provisos shall be substituted, namely:-

“Provided that an application shall not be made for notification of a bond which is to be issued beyond a period of two financial years following the financial year in which such application is made:

Provided further that an application made in Form No. 5B shall be disposed of within a period of six months from the date of receipt of such application.”;

(b) in sub-rule (2), for clause (i), the following clause shall be substituted, namely:-

“(i) where the application is made by any infrastructure capital company or infrastructure debt fund or a public sector company, being a Government company defined under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013), a copy of certificate of incorporation under the Companies Act, 2013 (18 of 2013).”;

(c) in sub-rule (3),-

(i) for the words “infrastructure capital fund” wherever they occur, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;

(ii) after clause (v), the following clause shall be inserted, namely:-

“(vi) where the application is made by an infrastructure debt fund, such fund shall along with the application, submit an undertaking that a sinking fund shall be maintained for the interest which will accrue on all the zero coupon bonds subscribed and such interest shall be invested in Government security as defined under clause (f) of section 2 of the Government Securities Act, 2006 (38 of 2006).”;

(d) in sub-rule (5) for the words “infrastructure capital fund”, the words “infrastructure capital fund or infrastructure debt fund” shall be substituted;

(e) for sub-rule (6), the following sub-rule shall be substituted, namely-

“(6) Every infrastructure capital company or infrastructure capital fund or infrastructure debt fund or public sector company shall submit within two months from the end of each financial year referred to in sub-clause (i) or sub-clause (ii) of clause (iv) of sub-rule (3), or, as the case may be, in sub-clause (i) or sub-clause (ii) of clause (v) of sub-rule (3), a certificate from an accountant as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year in Form No. 5BA.”;

(f) Explanation below sub-rule (7) shall be omitted;

(g) after sub-rule (7) the following shall be inserted, namely:─

“(8) The application in Form No. 5B referred to in sub-rule (1) and the certificate of accountant in Form 5BA referred to in sub-rule (6) shall be furnished electronically either under digital signature or electronic verification code.

(9) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing of Form No. 5B and Form No. 5BA.

Explanation.- For the purposes of this rule, the expressions,-

(i) “discount” and “period of life of the bond” shall have the same meanings respectively assigned to them in clause (i) and clause (ii) of the Explanation to clause (iiia) of subsection (1) of section 36;

(ii) “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems);

(iii) “infrastructure debt fund” shall mean the infrastructure debt fund notified by the Central Government in the Official Gazette under clause (47) of section 10 of the Act.”.

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