CBDT Amends IT Rules 2025: New Investment & Compliance Norms for Infrastructure Debt Funds

The Central Board of Direct Taxes (CBDT) has issued the Income-tax (Third Amendment) Rules, 2025, introducing crucial updates to Rule 2F of the Income-tax Rules, 1962. These amendments primarily impact Infrastructure Debt Funds (IDFs), outlining revised eligibility criteria, investment norms, and compliance requirements.

Key Highlights of the Amendment

1. NBFC Compliance for IDFs
   The amendment mandates that Infrastructure Debt Funds must operate as Non-Banking Financial Companies (NBFCs) and adhere to Reserve Bank of India (RBI) regulations.

2. Restricted Investment Scope
   IDFs can now invest only in:

   • Infrastructure projects that have completed at least one year of successful commercial operations.
   • Toll-Operate-Transfer (TOT) projects as direct lenders.

3. Fundraising Regulations
   IDFs can raise funds through:

   • Rupee-denominated bonds or foreign currency bonds under RBI and FEMA guidelines.
   • Zero coupon bonds, in accordance with Rule 8B.
   • External Commercial Borrowings (ECBs), provided the loan tenure is at least five years and is not sourced from foreign branches of Indian banks.

4. Investment Restrictions
   IDFs are barred from investing in projects where their specified shareholders, associated enterprises, or groups of specified shareholders hold a substantial interest.

5. Definition of "Specified Shareholder" Updated
   The definition now includes NBFCs, banks, or any person holding at least 30% of voting power in an Infrastructure Debt Fund.

Implications for the Infrastructure Sector

The revised framework aims to:

• Enhance transparency and risk management in IDF operations.
• Improve credit availability for well-established infrastructure projects.
• Align IDF regulations with RBI and FEMA guidelines for foreign investments.

Conclusion

With these changes, CBDT is strengthening the regulatory landscape for Infrastructure Debt Funds, ensuring robust governance and financial discipline. Stakeholders, including investors, NBFCs, and infrastructure firms, should assess the impact of these modifications on their investment strategies and compliance obligations.

Official copy of the notification has been attached