Key Points
Budget Expectations: In recent times, India has made significant strides in developing its national infrastructure in terms of expanding the road and rail network, power generation and transmission capacity, telecom infrastructure, port, and airport capacity, etc..
With a view to facilitate this, Indian Government through the Budget 2020 introduced a new tax incentive provision (section 10(23FE)) in the Income-tax Act to attract long term investment for promoting infrastructure development in India..
A complete tax exemption was provided to various income streams (interest, dividend, and capital gains) earned by notified Pension Funds and Sovereign Wealth Fund (SWFs) from investments in infrastructure sector, subject to certain eligibility conditions...
While there are host of conditions, such as SWF and Pension Funds should be notified by Central Board of Direct Taxes, investments should be in specified infrastructure space or Infrastructure Trust or Alternate Investment Fund making infrastructure investments, investment should be held for more than three years, etc., one of the critical conditions for the tax exemption is that the investments should be made by SWF and Pension Funds before 31 March 2024...
Post introduction of this provision, the Indian Government has made several modifications in the provisions with an aim to broad base the incentive (expansion of definition of infrastructure), provide clarifications on practical challenges faced, such that the real intent behind the introduction of the tax incentive could be achieved..
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