Exemption of specified income of Core Settlement Guarantee Fund (SGF) set up by a recognized Clearing Corporation [Section 10(23EE)] :

(i) The Clearing Corporations are required, under the provisions of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 notified by SEBI, to establish a fund, called Core Settlement Guarantee Fund (Core SGF) for each segment of each recognized stock exchange to guarantee the settlement of trades executed in respective segments of the exchange.

(ii) Under sections 10(23EA), 10(23EC) and 10(23ED), income by way of contributions received from recognized stock exchanges or commodity exchanges and the members thereof or depositories of Investor Protection Fund set up by such recognised stock exchanges in India, or by commodity exchanges in India or by such depository, respectively, as the Central Government may notify in this behalf, are exempt from taxation.

(iii) On parallel lines, clause (23EE) has been inserted in section 10 to exempt any specified income of such Core SGF set up by a recognized clearing corporation in accordance with the regulations, notified by the Central Government in the Official Gazette.

(iv) However, where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part with the specified person, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is shared, and shall accordingly be chargeable to income-tax.

	Terms	Meaning
(i)	Recognised clearing corporation	Meaning assigned as per Regulation 2(1)(o) of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made under the SEBI Act, 1992 and Securities Contracts (Regulation) Act, 1956 i.e., “Recognised clearing corporation” means a clearing corporation which is recognised by the SEBI under section 4 read with section 8A of the SEBI Act, 1992;
(ii)	Regulations	Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made under the SEBI Act, 1992 and Securities Contracts (Regulation) Act, 1956.
(iii)	Specified Income	(a) the income by way of contribution received from specified persons; (b) the income by way of penalties imposed by the recognized clearing corporation and credited to the Core Settlement Guarantee Fund; or (c) the income from investment made by the Fund.
(iv)	Specified person	(a) any recognised clearing corporation which establishes and maintains the Core Settlement Guarantee Fund; (b) any recognised stock exchange being shareholder in such recognised clearing corporation or a contributor to Core Settlement Guarantee Fund; and (c) any clearing member contributing to the Core Settlement Guarantee Fund.