Rule 10V of the Income Tax rules deals with calculation of remuneration to be paid to a fund manager as required under Section 9A of the Income Tax act.
Before this amendment the fund manager under sub rule 7 had to, in addition to any report required to be furnished by it under section 92E, obtain a report from the accountant in respect of activity undertaken for the fund and furnish such report on or before the specified date in the Form No. 3CEJ duly verified by such accountant in the manner indicated therein and all the provisions of the Act shall apply as if it is a report to be furnished under section 92E.
Also there was no quantification of remuneration of the fund manager as per rule 10V.
However, after the amendment i.e. w.e.f. 01.04.2019 sub rule 5 to 10 shall not apply and thus remuneration shall be calculated in the following manner:
In case where the fund is Category-I foreign portfolio investor referred to in item (i), item (ii) or item (iii), and sub item III of item (iv) of clause (a) of regulation 5 of the Securities and Exchange Board of India remuneration shall be 0.10 per cent of the asset under management.
In other cases, the amount of remuneration shall be, –
(a) 0.30 per cent of the asset under management; or
(b) 10 per cent of profits derived by the fund in excess of the specified hurdle rate from the fund management activity undertaken by the fund manager, where it is entitled only to remuneration linked to the income or profits derived by the fund; or
(c) 50 per cent of the management fee, whether in the nature of fixed charge or linked to the income or profits derived by the fund from the management activity undertaken by the fund manager, paid by such fund in respect of the fund management activity undertaken by the fund manager as reduced by the amount incurred towards operational expenses including distribution expenses, if any:
Provided that the provisions of this sub-clause shall apply only in case the fund is also making payment of management fee to any other fund manager.
Provided further that in case where the amount of remuneration is lower than the amount arrived at under clause (i) or clause (ii), the fund may, at its option, apply to the Member, Central Board of Direct Taxes referred to in sub rule (2) of rule 10VA seeking approval of the Board under said rule for that lower amount to be the amount of remuneration.
The fund manager shall, in addition to any report required to be furnished by it under section 92E, obtain a report from the accountant in respect of activity undertaken for the fund and furnish such report on or before the specified date in the Form No. 3CEJA.
To read full notification and Form 3CEJA CLICK HERE.
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