Form 190 — Mutual Fund Infrastructure Bond Approval Explained for AMCs

The Income-tax Act, 2025 provides tax incentives for investments in infrastructure bonds issued by public companies and mutual funds. Under Schedule XV (paragraph 1(z)(ii)), subscription to units of any mutual fund approved by the Board qualifies for deduction under section 123. Form 190 is the application form for mutual funds seeking approval for their infrastructure bond scheme. Understanding this form is essential for Asset Management Companies (AMCs) planning to launch such schemes.

Overview of Schedule XV

Deduction under Section 123

Section 123 provides for deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, and subscription to certain equity shares or debentures.

Mutual Fund Infrastructure Bonds

Schedule XV (paragraph 1(z)(ii)) provides for deduction for subscription to:

• Any units of any mutual fund referred to in Schedule VII (Table: Sl. No. 20 or 21)
• Approved by the Board on an application made by such mutual fund
• If the amount of subscription to such units is subscribed only in the eligible issue of capital of any company

Approval Requirement

The Board's approval is required for the mutual fund's infrastructure bond scheme. The application must be made in Form 190.

Form 190 — Mutual Fund Infrastructure Bond Approval Application

Purpose

Form 190 is the application form for mutual funds seeking approval of their infrastructure bond scheme as an eligible investment under Schedule XV (paragraph 1(z)(ii)).

Filing Details

To Whom

• Central Board of Direct Taxes (CBDT), New Delhi

Timing

• Three months before the public issue

Mode

• Electronic filing as specified by the Principal Director General of Income-tax (Systems)

Verification

• By the person authorised to verify the return of income under section 265

Documents to be Attached

• Copy of certificate of registration issued by the Securities and Exchange Board of India (SEBI)
• Audited balance sheet and profit and loss account for three tax years immediately preceding the tax year in which the application is made (or for the period of existence, whichever is lesser)

Line-by-Line Explanation

Part I: Basic Information

1. Name of the Mutual Fund

   • Full legal name of the mutual fund

2. SEBI Registration Number

   • Registration number issued by SEBI

3. Permanent Account Number (PAN)

   • PAN of the mutual fund

4. Address

   • Registered office address

5. Date of Registration

   • Date of registration with SEBI

Part II: Details of Infrastructure Bond Scheme

6. Type of Scheme

   • Infrastructure bond scheme

7. Amount of Issue

   • The amount proposed to be raised through the scheme

8. Date of Issue

   • The proposed date of the public issue

9. Purpose of Investment

   • Investment in eligible issue of capital of companies

10. Eligible Issue of Capital

    • Description of the eligible issue of capital in which the mutual fund will invest

11. Utilisation of Subscriptions

    • Details of the proposed utilisation of the subscriptions

Part III: Approval and Conditions

12. Approval Sought

    • Approval of the Board for the mutual fund's infrastructure bond scheme

13. Undertaking

    • That the entire subscription will be invested in eligible issue of capital
    • That the scheme will be made in accordance with the conditions

Part IV: Declaration and Verification

14. Declaration

    • That the information furnished is correct
    • That the mutual fund will comply with the conditions

15. Signature and Date

    • Signature of the authorised person
    • Date of signing

Conditions for Approval

Investment Requirements

The mutual fund must invest all its subscriptions in the eligible issue of capital of any company referred to in Schedule XV (paragraph 6(i)).

Year 1

• At least 25% of the capital raised shall be invested in the eligible issue of capital
• Within one year from the date of approval

Within Three Years

• The rest of the capital shall be invested within three years from the date of approval

Certificate

Every mutual fund shall submit a certificate from an accountant specifying the amount invested in each tax year, from the date of approval of the Board.

Withdrawal of Approval

The Board shall have the power to withdraw the approval if the mutual fund:

• Fails to make investments as per the conditions
• Fails to file the certificate

Practical Considerations

Timing of Application

The application must be made three months before the public issue. This allows sufficient time for the Board to process the application.

Documentation

The applicant must provide all necessary documents, including:

• Copy of SEBI registration certificate
• Audited financial statements

Investment Schedule

The mutual fund must plan the investment schedule to ensure compliance with the 25% and full investment requirements.

Certificate from Accountant

The certificate from an accountant is required for each tax year to confirm the amount invested.

Withdrawal of Approval

The mutual fund must ensure compliance with all conditions to avoid withdrawal of approval.

Common Mistakes

1. Late Application

   • Application not filed three months before the issue

2. Incomplete Documentation

   • Missing required documents

3. Failure to Invest

   • Not investing the required amount within the prescribed period

4. Failure to File Certificate

   • Not filing the accountant's certificate

5. Non-Compliance with Conditions

   • Not complying with the conditions of approval

Penalties for Non-Compliance

• Withdrawal of approval: Loss of tax benefits for subscribers
• Potential penalties under the Act for non-compliance

Expert Advisory

Given the complexity of mutual fund infrastructure bond approval and the importance of compliance, professional advisory is essential. Anuj Desai & Associates provides comprehensive services for mutual fund infrastructure bond approval, including:

• Eligibility Assessment: Determining eligibility for approval
• Application Preparation: Preparation of Form 190
• Documentation: Compilation of required documents
• Compliance Review: Review of compliance with conditions
• Representation: Representation before the Board

With deep expertise in mutual fund taxation and infrastructure financing, Anuj Desai & Associates ensures that your infrastructure bond scheme is approved and compliant.

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Need expert assistance with mutual fund infrastructure bond approval or Form 190? Contact Anuj Desai & Associates today for comprehensive advisory, application, and compliance services. [Contact Us] to schedule a consultation.