CBDT notifies minimum fees for managers of India-based offshore funds : 29-05-2020

The Central Board of Direct Taxes (CBDT) Thursday notified the minimum fee for fund managers managing offshore funds from India, in a bid to simplify regulatory environment and make India a more attractive destination for relocation of offshore funds.

The floor rate for Category I foreign portfolio investors (FPIs), which includes pension funds and sovereign wealth funds, has been set as 0.1% of the assets under management, lower compared to private equity funds, alternate investment funds and Category II FPIs. Capping of fee for these entities has been kept at 0.3% of the assets under management or 10% of profits derived by the fund in excess of the specified hurdle rate or 50% of the total management fee.

In case where the amount of remuneration is lower than the amount arrived at, funds can obtain approval from the Board.

The changes have been made effective through amendment of Section 9A of the Income Tax Act on May 27. The Board had first floated the norms as a draft in December 2019.

Experts added that the move to tax only the fund managers’ income and not the entire global income of the global fund would prompt offshore funds to aggressively look at India.

Source : Economic Times