Section 10(23BBB) of the Income Tax Act provides a tax exemption for income earned by the European Economic Community (EEC) in India, but only under specific conditions.
Key Features:
- Eligible Entity: The exemption applies exclusively to the European Economic Community, as established by the Treaty of Rome, 1957.
- Nature of Income: The exemption covers interest, dividends, and capital gains.
- Source of Income: These must arise from investments made out of EEC funds.
- Government Notification: The investments must be made under a scheme notified by the Central Government in the Official Gazette.
Example:
Suppose the EEC invests ₹100 crore in an Indian infrastructure project under a scheme notified by the Indian government. If it earns ₹8 crore in interest and ₹2 crore in capital gains from this investment, the entire ₹10 crore is exempt from Indian income tax, provided the scheme is officially recognized.
This provision is part of India’s broader effort to foster international cooperation and attract institutional investments from global entities like the EEC.
