Key Points
In order to finance infrastructure projects, the government has extended the tax exemption for qualifying investments made by Sovereign Wealth Funds and Pension Funds until March 2025.Getty.
The Indian government has recognized this participation and a provision of long term and steady flow of capital by SWFs / PFs was introduced as a tax incentive in Budget 2020 to provide tax exemption for various streams of income earned by PFs/ SWFs like interest, dividend, and capital gains through Section 10(23FE) of the Income Tax Act, 1961...
In a welcome move, the Indian Government has appreciated this requirement and proposed continuity of the tax exemption to qualifying investments made before March 2025 (original tax exemption was restricted to investments made before 31 March 2024) without waiting for full budget in July 2024...
Many were wondering whether the tax exemption to SWFs / PFs would be extended in the interim budget, considering that the Finance Minister has previously mentioned that no major changes will be proposed in the interim budget. While the Finance Minister did stay on course with her statements, she prudently differentiated the necessity of the long term and patient funding from SWFs/ PWFs, which could play a pivotal role in infrastructure projects...
The subject extension of tax exemption is a step in right direction and would further the Indian Government's efforts to encourage sustained flow of private funds in the infrastructure space in India, which in turn would give a flip to the overall Indian economy...
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