The form is part of the compliance framework under the new tax law and is not meant for individual taxpayers. Instead, it applies to certain investment funds that seek exemption under Section 11 read with Schedule VI (Table: Serial Nos. 1 to 4) of the Income-tax Act, 2025.
Here’s a closer look at what Form 68 is, who needs to file it and why it is important.What is Form 68?
Form 68 is an annual statement of exempt income that specified funds are required to file to claim exemption on income attributable to units held by non-resident investors. The benefit is available only where the non-resident investor does not have a permanent establishment in India.
According to the Income Tax Department’s FAQs, filing Form 68 is a mandatory condition for making a valid claim for this exemption under the Income-tax Act, 2025.
Who is required to file it?
The filing requirement applies to specified funds, including Category III Alternative Investment Funds (AIFs), Retail Funds and Exchange Traded Funds (ETFs). If these funds claim exemption on income attributable to eligible non-resident unit holders, they are required to file Form 68 annually.
The form is to be verified by the Principal Officer or Managing Trustee of the specified fund. While verifying it, the authorised person confirms that the information furnished is correct, the fund satisfies the prescribed eligibility conditions and that units held by resident investors have not been treated as non-resident holdings while computing exempt income.
How should Form 68 be filed?
Form 68 can be filed only through the Income Tax Department’s e-filing portal. It must be verified using either a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC). The department does not allow offline filing of the form.
The statement has to be filed on or before the due date applicable for filing the fund’s income tax return under Section 263(1)(c) of the Income-tax Act, 2025. The applicable due date depends on the category of the specified fund.
What documents are required?
While filing Form 68, specified funds may need documents such as the trust deed, memorandum of association or other legal instrument evidencing the formation of the fund, the registration certificate issued by the International Financial Services Centres Authority (IFSCA), annual financial statements for the relevant tax year, statements of securities held and transactions undertaken during the year, and details of unit holders along with their residency status.
The department has also made two annexures mandatory. Annexure A1 captures details of income arising from the transfer of securities during the tax year, while Annexure A2 contains details of income from securities issued by non-residents and income earned from securitisation trusts.
Can the form be revised?
No. Once Form 68 has been submitted, duly verified and an acknowledgement has been generated, it cannot be edited or revised. The department advises specified funds to ensure that all details are accurate before final submission.
The form also cannot be filed without a valid Permanent Account Number (PAN) of both the specified fund and the Principal Officer or Managing Trustee verifying the statement.
Why is Form 68 important?
According to the Income Tax Department, filing Form 68 within the prescribed time limit is a mandatory compliance requirement for specified funds claiming exemption on eligible income attributable to non-resident investors.
At the same time, filing the form by itself does not automatically entitle a fund to the exemption. The specified fund must also satisfy all other eligibility conditions prescribed under the Income-tax Act, 2025 and the relevant rules.
In effect, Form 68 serves as the annual reporting mechanism through which eligible specified funds disclose exempt income and support their claim for tax exemption under the new tax regime.
