Desk
Share_1463940714.jpg)
Tax exemption: There has been a major easing of restrictions on SWFs and Pension Funds. Available funds for investment in India have been made tax exempt by the Central Government for another five years or till March 31,2030. This comes to light with a media report. The Department of Revenue notifies this on Saturday. The announcement has been made in this year’s Union Budget. Because of this exemption, sovereign wealth funds and pension funds benefit from exemption from tax on income in the form of dividends, interest and capital gains on investments made in India. The objective of offering such reliefs is to attract foreign investments for the long term as there is immense demand for infrastructure, telecom, energy, logistics and other crucial sectors in India.
The rule of tax exemption was covered under the 2020 Finance Budget, Section 10.
The government issued Section 10 (23 FE) of the Income Tax Act in the year 2020. Under this provision, under certain conditions, dividend, interest, and long term capital gains on investment in specified infrastructure ventures were exempted from tax. The tax exemption rule is relevant for investments done post 1st April 2020. It seeks to enable steady foreign investments over an extended period of time in significant construction projects of the nation. Previously this exemption was only until 31st March 2024, but then it was extended until 31 March 2025. This was disclosed by the minister of finance Nirmala Sitharaman in her speech for interim budget 2024-2025.
What are Sovereign Wealth Fund and Pension Fund?
Sovereign Wealth Fund is a government-owned investment fund. Funding usually stems from national reserves, trade surpluses, or profits from oil exports. Norway’s Government Pension Fund Global, Abu Dhabi Investment Authority (ADIA), and GIC Temasek Holdings are examples of sovereign wealth funds. Now talking about pension funds, they are retirement savings vehicles that collect contributions from employees and their companies and invest the funds. It facilitates monthly pension payments to retired individuals. For instance, Canada Pension Investment Board.
