Rule 282: Conditions for a foreign pension fund under Schedule V
Rule 282 lists the other conditions a pension fund must satisfy for Schedule V [Table: Sl. No. 7. Note 5(a)(iii)], and how it applies for notification. The fund must be regulated under foreign law, administer or invest assets for retirement and similar benefits, use earnings only for those obligations, report each Indian investment quarterly in Form No. 175, and file its return with a Form No. 176 accountant's compliance certificate. The application for notification is in Form No. 174.
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Bare law
Rule 282 - Notification of pension fund and other conditions to be satisfied by the pension fund
(1) The pension fund mentioned in Schedule V [Table: Sl. No. 7.Note 5(a)(iii)] to the Act shall be required to satisfy the following other conditions: —
(a) it shall be regulated under the law of a foreign country including the laws made by any of its political constituents being a province, State or local body, by whatever name called, under which it is created or established, as the case may be;
(b) it shall be responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
(c) the condition in clause (b) shall be deemed to have been satisfied with respect to assets being administered or invested, if the following conditions are satisfied: —
(i) value of such assets is not more than 10% of the total value of the assets administered or invested by such fund;
(ii) such assets are wholly owned directly or indirectly by the Government of a foreign country; and
(iii) such assets vests in the Government of such foreign country upon dissolution;
(d) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (b) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;
(e) the provisions of clause (d) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;
(f) the provisions of clause (d) shall not apply to earning from the assets referred to in clause (c), if the said earning are credited either to the account of the Government of that foreign country or to any other account designated by such Government so that no portion of the earnings inures any benefit to any private person;
(g) it shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 175;
(h) it shall file return of income on or before the due date specified under section 263(1)(c) and furnish a compliance certificate in Form No. 176 from an accountant as defined in section 515(3)(b) along with such return; and
(i) the expression loans and borrowings mentioned in this sub-rule shall have the meaning assigned to them in Schedule V [Table: Sl. No. 7.Note 5(c)] to the Act.
(2) For the purposes of notification under Schedule V [Table: Sl. No. 7.Note 5(a)(iii)(D)] to the Act, the pension fund shall make an application in Form No. 174 enclosing therewith relevant documents and evidence, to the Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division.
Rule breakdown
Core conditions: Rule 282(1)
Regulated under the law of a foreign country, including laws of its political constituents.
Responsible for administering or investing assets for retirement, social security, employment, disability, death benefits or similar compensation.
Assets up to 10% of the total that are wholly owned by the foreign Government and vest in it on dissolution are treated as meeting that condition.
Earnings and assets used only for those obligations; no benefit to any other private person (with stated exceptions for creditors and depositors on borrowings other than for investment in India, and Government-credited earnings).
Reporting
Each investment in India during a quarter: Form No. 175 within one month from the end of the quarter.
Return of income by the due date under section 263(1)(c), with a compliance certificate in Form No. 176 from an accountant as defined in section 515(3)(b).
Application: Rule 282(2)
Form No. 174 with documents to the CBDT Member supervising the Foreign Tax and Tax Research Division.
Key takeaways
Foreign regulation
Fund must be regulated under foreign law.
Quarterly reporting
Form No. 175 within one month after each quarter.
Annual compliance
Return plus Form No. 176 certificate.
Practical checklist
- Set a quarterly calendar for Form No. 175.
- Arrange the accountant's Form No. 176 certificate before the return due date.
Avoid
- Do not let earnings or assets benefit a private person.
FAQs
Which form is used to apply for notification?
Form No. 174 (Rule 282(2)).
How often are investments reported?
Each investment made in India during a quarter is reported within one month from the end of the quarter in Form No. 175.
What goes with the return of income?
A compliance certificate in Form No. 176 from an accountant as defined in section 515(3)(b).
Glossary
- Pension fund
- The fund referred to in Schedule V [Table: Sl. No. 7. Note 5(a)(iii)].
- Form No. 176
- Accountant's compliance certificate filed with the return.