CBDT extends I-T exemption window for sovereign wealth, pension funds till 2030
Sep 2, 2025
Synopsis
The CBDT has extended income tax exemptions for sovereign wealth and pension funds investing in India's infrastructure until March 31, 2030. This move, formalized after an earlier announcement, aims to attract long-term global capital by exempting these funds from taxes on dividends, interest, and capital gains.
The Central Board of Direct Taxes (CBDT) on Tuesday extended the timelines for income tax exemption available to sovereign wealth funds (SWFs) and pension funds by six years.
The move allows these long-term global investors to claim benefits on eligible investments made in India till March 31, 2030. Earlier, the Department of Revenue had formalised a similar extension through a notification in July, following up on an announcement first made in the Union Budget earlier this year.
Under Section 10(23FE) of the Income Tax Act, introduced in 2020, notified SWFs and pension funds are exempted from paying tax on dividends, interest, and long-term capital gains arising from their investments in specified infrastructure businesses, subject to certain conditions.
The scheme, effective from April 1, 2020, was designed to attract large, stable pools of capital into critical infrastructure projects in India.
According to an earlier ET report, experts had largely welcomed the extension, noting that it provides much-needed policy clarity for funds with long investment horizons.
However, some industry voices had argued earlier that the relief should have been granted for an even longer period, given that infrastructure projects typically span decades.
The impact of the exemption has been visible in recent years. Direct investments by SWFs and pension funds nearly doubled to $6.712 billion in 2022 from $3.797 billion a year earlier. According to NSDL data, assets under custody of such funds in Indian companies rose 60% year-on-year to Rs 4.7 lakh crore in the 12 months ended April 2024.
So far, the government has notified around 35 sovereign wealth and pension funds eligible for the exemption. These include Sama Foreign Holdings of Saudi Arabia, Singapore’s GIC and Temasek, the Kuwait Investment Authority, and Norway’s Government Pension Fund.
[The Economic Times]
