Quick Summary
As the Union Budget 2025 approaches, foreign sovereign wealth funds (SWFs) and pension funds are lobbying for an extension of the tax exemption on their investments in India's infrastructure sector. The current tax benefit, granted under Section 10(23FE) of the Income Tax Act, is set to expire on March 31, 2025. Industry experts and stakeholders are calling for a three-year extension to sustain foreign capital inflows into this critical sector. Key Aspects of the Tax Exemption Scope of Ben
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FAQ :
SWFs are seeking an extension for the tax exemption on their income derived from investments in India's infrastructure sector, currently provided under Section 10(23FE) of the Income Tax Act.
The current tax exemption is set to expire on March 31, 2025.
Industry experts and stakeholders are calling for a three-year extension of the tax exemption.
The exemption currently covers income such as dividends, interest, and long-term capital gains from infrastructure investments made by notified SWFs and pension funds.
If the exemption is not extended, sovereign wealth funds will be subject to standard tax rates for offshore investors, which experts warn could deter foreign investment, especially given the weakening rupee and softer market conditions.
Yes, industry experts suggest broadening the exemption scope to include offshore platforms where SWFs often pool funds, and addressing tax provisions related to indirect transfers through offshore entities.
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