Amendment of Section 10 related to Exempt income of Non-Residents

The Finance Bill, 2025, proposes several key changes in the Income Tax Act, 1961, to continue reforms in the direct tax system through tax reliefs, removing difficulties faced by taxpayers, and rationalizing¹ various provisions. Here are some of the key changes:

Amendment of Section 10 related to Exempt income of Non-Residents
The existing provisions of clause (4E) of section 10 of the Act provide that any income accrued
or arisen to, or received by a non-resident on account of transfer of non-deliverable forward contracts or
offshore derivative instruments or over the-counter derivatives, or distribution of income on offshore
derivative instruments entered into with an offshore banking unit of an International Financial Services
Centre referred to in sub-section (1A) of section 80LA shall not be included in the total income of the
non-resident.
2. In order to further incentivize operations from the IFSC, it is proposed to amend clause (4E) of
section 10 to provide that the income of a non-resident on account of transfer of non-deliverable
forward contracts or offshore derivative instruments or over the-counter derivatives, or distribution of
income on offshore derivative instruments, entered into with Foreign Portfolio Investors being an IFSC
unit shall also not be included in the total income subject to certain conditions as may be prescribed.
3. This amendment will take effect from the 1st day of April, 2026 and shall accordingly, apply in
relation to the assessment year 2026-27 and subsequent assessment years.
[Clause 6]