On 9 May 2022, the Central Board of Direct Taxes (CBDT) issued Circular No. 9 of 2022, which provides a set of guidance on the provisions (clause (23FE) of Section 10) of the Income Tax Act that exempt sovereign wealth funds (SWF) and pension funds from a tax on their income from infrastructure investments in India.
Section 10 (23 FE) of the Income Tax Act exempts the income earned from investments channeled into the infrastructure sector through these entities. The tax incentive covers income that is in the nature of dividend, interest, or long-term capital gains arising from investments made in India between 1 April 2020 and 31 March 2024.
Further, the fund will have to fulfill several other conditions to get the exemption. Including filing of the income tax return for the years that the investment is made till the time, it’s liquidated, auditing of its books, etc.
