Top Stories CBDT releases Supplementary FAQs on the Finance Bill, 2025 [Read Notification] CBDT releases Supplementary FAQs on Finance Bill, 2025, clarifying important tax amendments for investment funds, IFSC entities, and procedural reforms By Kavi Priya – On March 25, 2025 8:30 pm – 4 mins read The Central Board of Direct Taxes (CBDT) has released Supplementary FAQs to provide a better understanding of the proposed changes in the Finance Bill, 2025. These cover key amendments in tax provisions related to investment funds, IFSCs, alternative investment vehicles, and taxation procedures.

Let us break it down: FAQ.1: Amendment of Section 9A of the Income-tax Act, 1961 Q.1. What are the existing conditions for investment by Indian residents in eligible investment funds under section 9A? Currently, Section 9A(3)(c) restricts aggregate investment by Indian residents (directly or indirectly) in an eligible investment fund to a maximum of 5% of the fund’s corpus. Q.2. What amendment has been proposed? Indirect investment by Indian residents will no longer be counted toward the 5% cap. This eases compliance and supports offshore fund manager relocation to India.

Q.3. What does section 9A(8A) provide? It allows the Central Government to relax certain conditions under Section 9A for eligible funds and fund managers located in IFSCs. Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now What change is proposed under section 9A(8A)? The government will regain the power to relax the 5% cap condition under Section 9A(3)(c), as it was proposed to be relaxed directly under the law. FAQ.2: Amendment of Proposed Section 44BBD of the Income-tax Act, 1961 Q.1. What does section 44BBD propose? It introduces presumptive taxation for non-residents providing technology/services to Indian electronics manufacturers, taxing 25% of receipts as business profits. Q.2. What amendment has been proposed? Sections 44DA and 115A will not apply to income taxed under section 44BBD, avoiding overlap and double taxation. FAQ.3: Amendment of Section 10(10D) of the Income-tax Act, 1961

Q.1. What was the proposed change under section 10(10D)? Proceeds from life insurance policies issued by IFSC insurance intermediary offices were to be exempt, without the usual premium cap condition. Q.2. Why is this amendment being modified? The correct term is “IFSC insurance office,” not “intermediary.” The amendment updates this reference. FAQ.4: Amendment of Section 10(4D) of the Income-tax Act, 1961 Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now Q.1. What does section 10(4D) provide? It grants tax exemption on the income of specified funds, subject to certain conditions. Q.2. What is the proposed amendment? Retail schemes and ETFs certified under IFSCA regulations will qualify for exemption under 10(4D) if they meet prescribed conditions. FAQ.5: Inclusion of Retail Schemes and ETFs in the Existing Relocation Regime – Section 47(viiad)

Q.1. What change has been made to the definition of ‘resultant fund’? It now includes Retail Schemes and ETFs under IFSCA, provided they meet conditions under section 10(4D). Q.2. What is the implication of this amendment? It enables tax-neutral relocation of original funds into Retail Schemes or ETFs for shareholders/unit holders. Q.3. What further amendment has been made? The requirement to meet section 10(4D) conditions has been dropped—IFSCA certification alone is now sufficient. FAQ.6: Incentives to IFSC – Exempt Income of Non-Residents – Section 10(4E) Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now Q.1. What transactions are covered under section 10(4E)? Transfers of NDFs, offshore/OTC derivatives, and income distributions on such instruments. Q.2. What change was proposed in the Finance Bill, 2025? The exemption now extends to transactions with FPIs in IFSCs, in addition to Offshore Banking Units. Q.3. What is the Government Amendment? It includes OTC derivative income distributions involving FPIs or Offshore Banking Units. FAQ.7: Amendment of Definition of ‘Capital Asset’ – Section 2(14)

Q.1. What does the Finance Bill, 2025 propose? Securities held by SEBI-regulated Category I & II AIFs are now capital assets. Q.2. What further amendment is proposed? This also includes AIFs regulated by IFSCA, ensuring broader coverage. FAQ.8: Amendments Related to Chapter XIV-B of the Income-tax Act, 1961 Q.1. What is the shift in focus under Chapter XIV-B? The focus has shifted from assessing total income to only undisclosed income during search cases. The Assessing Officer can use search findings and other information to assess hidden income, while regular income will be based on existing books and records.

Q.2. What change is made to section 158BA? The term “total income” is replaced with “total undisclosed income.” Q.3. How is section 158BB amended? It details how to compute total undisclosed income, distinguishing it from disclosed income. Q.4. What forms undisclosed income under 158BB? It includes amounts declared in block return and amounts determined by the AO. Q.5. What income is excluded from undisclosed income? Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now Regularly assessed income, return-declared income before the search, and specified income under sections 115A(5), 115G, and 194P(1). Q.6. How is tax calculated on undisclosed income? Tax is levied as per section 158BB(1) on the total undisclosed income. Q.7. What is the time limit to file block return? 60 days from notice under section 158BC.

Q.8. Can an extension be requested?  Yes, an additional 30 days can be granted for auditing accounts if conditions are met. Q.9. What are the conditions for time extension? Return due date hasn’t passed, audit is required under 44AB, books are unaudited, and written request is made.

Q.10. What changes are made to section 158BD? The block period for a person depends on the block period of the relevant “specified person.” a) Where there is one specified person relevant to such other person, the block period for such other person shall be the same as that for the specified person b) Where there is more than one specified person relevant to such other person, the block period shall be the same as that of the specified person whose block period ends on the later date. Q.11. How is abatement determined under section 158BD?

Based on the date on which money, bullion, jewellery, virtual digital assets, or other valuable items, or books of account, documents, or other materials relating to undisclosed income were received are received by the AO. Q.12. What’s the new timeline for completing assessment? 12 months from the end of the quarter of the last search execution; 13 months if extension is granted. Q.13. What change is made to section 113? The word “total income” is replaced with “total undisclosed income,” taxed at 60%. FAQ.9: Amendments Proposed in Provisions of Section 143 Q.1. What is the function of section 143(1)? It allows for processing returns by making adjustments for errors/apparent incorrect claims. Q.2. What amendment is proposed? It introduces checks for inconsistencies in the return when compared to previous years. Q.3. What inconsistencies may be flagged? Details are yet to be notified, but an example includes mismatches in credit claims between years.