India Budget Series




In the above case, the investors invest in an offshore fund that is located outside India.

The fund, in turn, appoints a consultant outside India. Further, consultant, in turn, from its office outside India, appoints a fund manager in India to take care of its Indian Portfolio.

In this case, if the fund is an eligible investment fund, the fund management activity carried out through the eligible fund manager, shall not constitute a business connection in India.

The following core criterias needs to be satisfied for a fund to qualify as an eligible investment fund:

-The fund is not a person resident in India

– Fund is located in the country with whom India has a valid DTAA

– Resident Investor participation in the fund shall not exceed 5% of the Total Fund Amount

– The fund shall have a minimum of 25 members

– A single member’s investment shall not exceed 10% of the total fund value.

It is proposed to expand the criteria to include that a fund shall be regarded as to be Eligible Investment Fund if the fund is established or incorporated or registered outside India in a country or a specified territory notified by the Central Government in this behalf.

It is further proposed that the condition of fund not controlling and managing businesses in India or from India shall be restricted only in context of activities in India and not from India



These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years


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