The Rule 9A of Income Tax Rules provides that an eligible investment fund carrying out fund management through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India of the said fund. An eligible investment fund shall meet the prescribed conditions. However, the investment fund set up as a Category-I Foreign Portfolio Investor and registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 is exempt from following conditions to qualify as an eligible fund:
(e) The fund has a minimum of twenty-five members who are, directly or indirectly, not connected persons;
(f) Any member of the fund along with connected persons shall not have any participation interest, directly or indirectly, in the fund exceeding ten per cent;
(g) The aggregate participation interest, directly or indirectly, of ten or less members along with their connected persons in the fund, shall be less than fifty per cent;
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