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Rule 143Published

Rule 143: Investment-division income for section 210 rates

Rule 143 calculates income of the specified offshore-banking investment division for section 210(3). Five income categories are added, with separate treatment for the specified short- and long-term gains. The annual statement is a condition for the stated rates.

Official notified Income-tax Rules, 2026

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This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.

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Bare law

Rule 143 - Determination of income of a specified fund attributable to investment division of an offshore banking unit under section 210(3)

(1) For the purposes of section 210(3), income of a specified fund, being the investment division of an offshore banking unit shall be computed in accordance with the following formula: — A + B + C + D + E Where, — A = income from securities, held by the eligible investment division, as referred to in section 210(1) [Table: Sl. No. 1]; B = income by way of short-term capital gain referred to in section 210(1)[Table: Sl. No. 2], accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 196, and held by such investment division; C = income by way of short-term capital gain referred to in section 210(1)[Table: Sl. No. 3], accrued or arisen to, or received by the eligible investment division as a result of transfer of security referred to in section 196, and held by such investment division; D = income by way of long-term capital gain referred to in section 210(1)[Table: Sl. No. 4], accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 198, and held by such investment division; E = income by way of long-term capital gain referred to in section 210(1)[Table: Sl. No. 5], accrued or arisen to, or received by the eligible investment division, as a result of transfer of a security referred to in section 198, and held by such investment division.

(2) Any expenditure incurred in relation to income referred to in A or B or C or D or E in sub-rule (1) shall not be allowed as a deduction from any other income under any provision of the Act, even if such expenditure has not been allowed as a deduction from income referred to in the said A or B or C or D or E.

(3) The eligible investment division shall furnish an annual statement of income, eligible for taxation under section 210(3), in Form No. 70 on or before the due date specified under section 263(1)(c).

(4) The income of an eligible investment division referred to in section 210(1)[Table: Sl. Nos. 1 to 5] shall not be eligible for tax rates specified therein unless the eligible investment division meets the requirement of sub-rule (3).

(5) For the purposes of this rule,— (a) "eligible investment division" means an investment division of an offshore banking unit which fulfils the conditions specified in Schedule VI [Note 1(g)(ii)(A) and (B)] to the Act; (b) "investment division of an offshore banking unit" shall have the meaning assigned to it in Schedule VI [Note 1(b)] to the Act; (c) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (d) ―specified fund" shall have the meaning assigned to it in Schedule VI [Note 1(g)(ii)] to the Act.

Rule breakdown

Check current exemptions before attributing taxable income

First establish whether the receipt or gain enters taxable total income under the current Act, including any applicable exemption and its conditions. This attribution rule does not itself determine whether an income item is exempt or override an exemption available under the amended Act.

Read the Taxation and Other Laws (Amendment) Act, 2026 together with the relevant current Act provisions before applying the allocation and rate rules; a specified-fund label alone does not establish an exemption.

Use the five-category A–E computation

A is the stated securities income. B and C split short-term gains according to whether section 196 securities are involved. D and E similarly distinguish long-term gains involving the specified section 198 securities.

Classify the security and income character correctly before applying the relevant section 210 table row. The formula A + B + C + D + E is not a single common tax rate.

Check the investment division’s statutory conditions

The eligible division must meet the cited Schedule VI conditions. The rule separately defines investment division, securities and specified fund.

Confirm those conditions for the actual division and tax year rather than relying solely on an entity’s offshore-banking description.

Do not move related expenditure to other income

Expenditure relating to A–E income cannot be deducted from other income, even if it was not allowed as a deduction against the relevant A–E category.

Maintain a supported allocation of costs between categories and other operations.

Annual Form 70 is required for the stated rates

The eligible division furnishes the annual income statement in Form 70 by the prescribed return-linked date. The printed cross-reference is section 263(1)(c); verify the current applicable deadline provision.

Sub-rule (4) states that the income is not eligible for the identified rates unless this statement requirement is met.

Reconcile the statement to the portfolio records

Prepare category-wise income schedules and transfer records, distinguish short- and long-term gains and reconcile the figures with the filed annual statement.

Keep the concessional-rate calculation distinct from the separate Rule 141 exemption calculation.

Key takeaways

Five categories

Separate the relevant securities-income and gains rows.

Statement linked to rates

Form 70 compliance is required.

No expense shifting

Related costs cannot reduce other income.

Practical checklist

  • Classify securities and gain types.
  • Document expense allocation.
  • Retain the annual statement filing record.

Avoid

  • Do not confuse this rate calculation with Rule 141’s exemption formula.

FAQs

Does A + B + C + D + E mean all income has the same rate?

No. The income categories refer to distinct rows of section 210.

Which statement is prescribed?

The annual statement in Form 70.

Can unused related expenses be deducted against other income?

Sub-rule (2) expressly prevents that deduction.

Glossary

A–E categories
The five securities-income and capital-gain categories specified in Rule 143(1).

Official sources