Interest accrued on motor accident compensation will no longer attract TDS See 'Corp Brief') FM proposes uniform MAT Treatment for non-resident opting for Presumptive Tax See 'Corp Brief') Tax certainty for non-resident individuals See 'Corp Brief') Govt. revised criteria for Inter-Group loan exclusion from 'Dividend' definition See 'Corp Brief') FDI Limit in Insurance Sector raised to 100%, subject to full domestic investment of premiums See 'Corp Brief') Govt to facilitate ICAI, ICSI, ICMAI to run short-term know-how courses for youth See 'Corp Brief') Government to set up 'BharatTradeNet' as Unified Digital Platform for international trade See 'Corp Brief') Sovereign Gold Bond Capital Gains exemption to apply only to original holders at maturity See 'Corp Brief') CSIR-NIO's Vizag Centre to play key role in offshore energy: MoS (See 'Corp Brief') FEMA - Statement recorded u/s 37 of FEMA did not amount to confession of criminal offence: HC (See 'Legal Desk') International Olympic Academy Director impressed by India's vision for sports (See 'Corp Brief') WB ranks India among top 5 in terms of private investment in infra (See 'Corp Brief') SEBI - In absence of explicit permission/exemption with respect to RFQ requirements, Noticee should have suspended its services if it was not feasible to engage large amounts of funds into working capital: SEBI (See 'Legal Desk') Survey: India should focus on application-based AI tools (See 'Corp Brief') IBC - NCLT can't decide title disputes over assets, including IPRs such as trademarks, unless they have direct & proximate nexus with insolvency resolution process: SC (See 'Legal Desk') UNCTAD ranks India as leading economy in trade partner diversification (See 'Corp Brief') The Securities Markets Code, 2025: Strengthened Enforcement, Weakened Accountability? (See 'CORP EINSICHT')

Print

Govt. revised criteria for Inter-Group loan exclusion from 'Dividend' definition

Published: Feb 01, 2026

By TIOLCorplaws News Service

NEW DELHI, FEB 01, 2026: EXITING Clause (40) of the section 2 inter alia provides the definition of dividend. Subclause (v) to long line of clause (40) provides that dividend does not include any advance or loan between two group entities, where, (A) one of the group entities is a “Finance company” or a “Finance unit”; and (B) the parent entity or principal entity of such group is listed on stock exchange in a country or territory outside India other than the country or territory outside India as may be specified by the Board in this behalf;

In order to rationalise the said provision, the FM proposed to amend the sub-clause (v) to long line of clause (40) to inter alia provide that, the other group entity to the transaction shall also be located in a country or territory outside India which shall be a notified jurisdiction,

Also, the parent entity or the principal entity of such group is listed on stock exchange in a country or territory outside India; and for such purposes the country or territory outside India shall be specified by the Central Government, by notification in the Official Gazette. For the purposes of aforementioned provisions, the FM also proposed to define the following terms, namely:

(a) “group entity” shall have the same meaning as assigned to the expression “group entities” in clause (m) of sub-regulation (1) of regulation 2 of the International Financial Services Authority (Payment Services) Regulations, 2024 made under the International Financial Services Centres Authority Act, 2019;

(b) “parent entity” or “principal entity” in relation to one or more other group entities, shall be an entity of which other group entities are subsidiary and such entity, (i) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiaries; or (ii) controls the composition of the Board of Directors.

These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the tax year 2026-27 and subsequent tax years.

TIOL CORP SEARCH

TIOL GROUP WEBSITES

taxindiaonline
taxindiainternational
tioltube
TKF
TIOLawards
A TIOL Website. Copyright © 2025 TIOLcorplaws.com All rights reserved.