Section 10(23FE) covers two very different investors under one clause: sovereign wealth funds and foreign pension funds. They get similar relief, but they do not file the same paperwork.
For a notified pension fund, the annual compliance document is Form 10BBC.
At a glance
- What it is
- Certificate of an accountant on compliance with section 10(23FE)
- Who it is for
- A notified pension fund — not a sovereign wealth fund
- Prescribing rule
- Rule 2DB
- Who signs
- A Chartered Accountant in practice
- Exempt income
- Dividend, interest and long-term capital gains from qualifying investment
- Holding period
- Three years
- Under the 2025 Act
- Schedule V, Table Sl. No. 7
What Form 10BBC is
Its official description is a certificate of accountant in respect of compliance to the provisions of clause (23FE) of section 10 of the Income-tax Act, 1961 by the notified Pension Fund. It is prescribed under Rule 2DB, which also sets out the conditions a pension fund must satisfy.
The accountant examines the relevant accounts, documents and records for the period and certifies that the fund has complied — that it remains eligible, that its investments qualify, and that the income claimed as exempt is of the right character.
Do not confuse it with the sovereign wealth fund filing. A notified SWF files an audit report with its return under CBDT Circular No. 15 of 2020, applies for notification in Form I and reports quarterly in Form II. A pension fund applies in Form 10BBA and certifies compliance in Form 10BBC under Rule 2DB. Same clause, different documents — and filing the wrong one does not discharge the obligation.
Who qualifies as a pension fund
Section 10(23FE) treats a pension fund as a specified person only where it is notified by the Central Government and satisfies the prescribed conditions. Broadly, the fund must:
- Be created or established under the law of a foreign country, including its laws on pensions or social security
- Be regulated under that country’s law, or administered by or under the supervision of its Government
- Not be liable to tax in that country, or be entitled to exemption there on its entire income
- Have its earnings and assets used only to meet statutory obligations and benefits to participants
- Not undertake any commercial activity outside its stated purpose
Notification is applied for in Form 10BBA. Until the Central Government notifies the fund, there is no exemption to certify.
The investment conditions
| Condition | Substance |
|---|---|
| Nature of income | Dividend, interest or long-term capital gains only |
| Where invested | Specified infrastructure business in India, by reference to the notified sub-sectors |
| Investment window | From 1 April 2020, extended by notification — verify the current end date |
| Holding period | At least three years |
| Funding | Not out of loans or borrowings, directly or indirectly |
The borrowing prohibition looks through to the source of funds. Where a specified fund has loans or borrowings, directly or indirectly, for the purpose of making the investment in India, it is not eligible. This tests how the investment was financed, not merely what was bought — and it is the condition that most often defeats an otherwise clean claim.
What the accountant is checking
- That the fund remains notified and still satisfies the conditions on which notification was granted
- That each investment falls within a specified infrastructure business
- That investments were made inside the applicable window
- That the three-year holding requirement is met, and any earlier disposal has been dealt with
- That the income claimed is dividend, interest or long-term capital gains
- That no part of the investment was funded by borrowings
Much of this turns on documents in a foreign language and under foreign law — the fund’s constitutional documents, its regulatory status, its tax position at home. The engagement usually needs international tax capability alongside the Indian analysis.
UDIN on Form 10BBC
Form 10BBC is expressly a certificate, so it sits in the Certificates category, where UDIN has been mandatory since 1 February 2019 — note this differs from the SWF audit report, which is an Audit and Assurance document with a 1 July 2019 date.
Sixty calendar days from upload. If the certificate is uploaded without a UDIN and the number is not updated within that window, the CBDT treats the form as invalid with all due consequences of law, even after acceptance. Revocation closes at 48 hours. For a fund whose exemption may run into large sums, that is an unreasonable risk to carry for a clerical step.
See our guide to UDIN generation.
Section 10(23FE) under the Income-tax Act, 2025
| Item | 1961 Act | 2025 Act |
|---|---|---|
| The exemption | Section 10(23FE) | Schedule V, Table Sl. No. 7 |
| Pension fund limb | Section 10(23FE) | Schedule V, Note 5(a)(iii)(D) |
| Sovereign wealth fund limb | Section 10(23FE) | Schedule V, Note 5(a)(ii)(G) |
| Pension fund notification application | Form 10BBA | Form 174 |
The certificate itself is not in the official form mapping. The Income Tax Department’s Form Mapping Guide lists the forms available on the e-filing portal from 1 April 2026, and neither Form 10BBC nor the SWF audit report appears in it. Confirm the current filing on the portal for the relevant year rather than assuming the old form carries over.
Frequently asked questions
Who files Form 10BBC?
A pension fund notified as a specified person under section 10(23FE), certifying compliance for the year.
Is Form 10BBC used by sovereign wealth funds?
No. A notified SWF files an audit report with its return, plus Form I for notification and quarterly Form II. Form 10BBC is the pension fund document.
Which rule prescribes it?
Rule 2DB of the Income-tax Rules, 1962.
How does a pension fund get notified?
By applying in Form 10BBA. Without notification there is no exemption.
What income is exempt?
Dividend, interest and long-term capital gains from qualifying investment in specified infrastructure business in India.
How long must the investment be held?
At least three years.
Can the fund borrow to invest?
No. Investment funded by loans or borrowings, directly or indirectly, disqualifies the exemption.
Is UDIN required?
Yes, in the Certificates category, with the 60-calendar-day update rule after upload.
Where does 10(23FE) sit under the 2025 Act?
Schedule V, Table Sl. No. 7 — the pension fund limb at Note 5(a)(iii)(D).
Does Form 10BBA change under the new Act?
Yes. It becomes Form 174 per the Department’s Form Mapping Guide.
In short
Form 10BBC is the pension fund half of section 10(23FE), and the first thing to get right is simply which half you are in — the SWF and pension fund routes share a clause and share almost nothing else. After that, the conditions that fail in practice are the three-year holding period and the prohibition on borrowed funding. Both are evidenced in the certificate, so build the file as you go rather than at year end.
Micro Advisor advises non-resident funds on Indian exemption claims and the related certification.
References
Disclaimer. General information, not professional advice. Section 10(23FE) and the investment window have been amended more than once; verify the position for the fund and year concerned.