Rule 284 exempts a non-resident's income from non-deliverable forward contracts, offshore derivative instruments or over-the-counter derivatives, and from distributions on them, if the contract is with an offshore banking unit (or a foreign portfolio investor unit) in an International Financial Services Centre and is not entered into through the non-resident's permanent establishment in India.
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Rules 2026 · Rule 284
Conditions for the purpose of Schedule VI [Table: Sl. No. 5] to the Act
Rules 261-310
Conditions (sub-rules 1 and 2). The exemption under Schedule VI [Table: Sl. No. 5] for income from the transfer of non-deliverable forward contracts, offshore derivative instruments or over-the-counter derivatives, or from distribution of income on them, applies if (i) the contract is entered into by the non-resident with an offshore banking unit of an International Financial Services Centre that holds a valid certificate under the International Financial Services Centres Authority (Banking) Regulations, 2020, or with a foreign portfolio investor that is a unit of such a Centre; and (ii) it is not entered into by the non-resident through or on behalf of its permanent establishment in India. The offshore banking unit or the foreign portfolio investor ensures condition (ii) is met.
Definitions (sub-rule 3). The rule defines derivative (section 2(ac) of the Securities Contracts (Regulation) Act, 1956), foreign portfolio investor (registered under the SEBI Foreign Portfolio Investors Regulations, 2019), non-deliverable forward contract (a contract for the difference between a previously agreed exchange rate and the actual spot rate at maturity, settled by a single payment in a foreign currency), offshore banking unit, offshore derivative instrument, over-the-counter derivatives, and permanent establishment (section 173(c)).