In order to implement budget announcement after the determination of the Finance Act, Finance Ministry has informed the expansion of the date of investments by 40 sovereign asset funds (SWFS) and pension funds (PFS) for another five years to use tax exemptions,
Earlier this exemption ended on March 31, 2025, but now the sunset date will be March 31, 2025. In other words, income earned with investments Until 31 March 2030 are exempt from income tax.
The funds that will receive benefits include Mic Redwood 1 RSC Limited Abu Dhabi, SWF in the United Arabian Emirates, Dagenham Investment PTE. LTD, Singapore established SWF, Aimco India Infrastructure Limited, Canada Pension Plan Investment Board, Caisse de Dépôt et Placement du Québec, Bricklayers Investment PTE. Ltd, Dagenham Investment PTE. Ltd.norfund, government of Norway next to others.
Clause (23FE) of section 10 of the Income Tax Act provides for the exemption to specified persons of income in the nature of dividend, interest, capital wins in the long term or certain other incomes that arise from an investment that it has made in India.
Specific people include SWF and PF that meets certain conditions and has been informed by the central government. Such a condition says that the Assessee submits the return of the income, for all relevant previous years that starts within the period from the date in which the aforementioned investment is made and ends on the date on which such investment is liquidated within the expiry date.
Another condition that the Assessee prescribes, does and does not undertake commercial activities, either within or outside India, except the aforementioned investment or investment of a similar nature.
De Assessee also has a monitoring mechanism to protect the investor investor mentioned, but will not manage the daily activities of the investute or state executive drivers in the Investing Company or participate in the decision -making process or check them;
The mechanism was introduced via the Finance ACT, 2020 to encourage investments from SWF and PF in the India infrastructure sector and prescribed investments are made on or after 1 April 2020 but on or before March 31, 2025.
According to the explanatory memorandum of the FY26 budget, suggestions have been received that, given the long-term infrastructure investments and the role of foreign SWFs and PFS in the financing of such projects, the Deadline for Investments under Clause (23FE) of section 10 are expanded.
This offers the stability and the time frame that is needed for global investors to make a substantial contribution to the development of the infrastructure of India.
Furthermore, the changes to Finance ACT 2024 have redesigned all capital profits of non-mentioned debt certificates as capital profits in the short term, regardless of the holding period.
This will result in the long-term profit due to investments in non-mentioned debt investments to be taxable in the hands of SWFs and PFS. Prior to the aforementioned changes, SWFs or PFS were eligible for exemptions on long-term capital profits of non-mentioned debt certificate on the basis of Clause (23FE) of section 10.
Finance ACT 2025 prescribes for long -term capital profits that resulting from an investment that it has done in India will not be included in the total income of a specified person under Clause (23FE) of section 10.
The investment date in the context of the aforementioned clause will also be extended until March 31, 2030 of 31 March, these changes are in force from 1 April 2025.
Published on July 12, 2025
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