The CBDT has by way of circular dated July 3, 2019 clarified that any income of non-resident investors from offshore investments routed through Category I or Category II Alternate Investment Funds ('AIFs'), being a deemed direct investment outside India by the non-resident investor, is not taxable in India under the IT Act. It is further clarified that loss arising from the offshore investment relating to the non-resident investor, being an exempt loss, will not be allowed to be set off or carried forward and set off against the income of the Category I or Category II AIF.

Previously published on September 30, 2019.

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