The easing of rules is intended to avoid genuine hardships, CBDT said, after it received representations that compliance could not be ensured for the previous financial year since the notification was issued after March 31, 2020.
The relaxation will be applicable only till March 31, 2021, the Board said in a circular dated January 15.
“It is stated that the remuneration to be paid to the fund manager, for the financial year 2021-22, shall be in accordance with sub-rule (12) of rule I OV of the Rules and the application for lower remuneration in terms of 2nd proviso for this year, if any, may be filed not later than February 1, 2021,” the Board added.
CBDT had in May 2020 notified the minimum fee as remuneration for fund managers managing offshore funds from India, in a bid to simplify the 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 include pension funds and sovereign wealth funds – had been set as 0.1% of the assets under management, lower than 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 cases where the amount of remuneration was lower than the amount arrived at, funds can obtain approval from the Board.
The changes were made effective through an amendment to Section 9A of the Income Tax Act on May 27.