CBDT Extends Tax Exemption For SWFs And Pension Funds Till 2030 to Boost Infra Investments

The Central Board of Direct Taxes (CBDT) has extended the tax exemption for sovereign wealth funds (SWFs) and pension funds investing in Indian infrastructure projects until March 31, 2030. This exemption, under Section 10(23FE) of the Income Tax Act, covers income from dividends, interest, and long-term capital gains.

Background of the Scheme

The scheme was first introduced in April 2020 to attract patient global capital into India’s long-term infrastructure projects. Sovereign funds from countries like Saudi Arabia, Singapore, Kuwait, and Norway have already participated.

Focus Areas for Investment

The extended policy encourages foreign capital into key areas such as:

• Commercial real estate
• Logistics parks
• Data centers
• Urban infrastructure

These investments reduce financing costs for long-gestation projects and ensure steady capital inflows.

Impact on Retail Investors

While large foreign funds are the direct beneficiaries, retail investors also gain indirectly. This happens through:

• Mutual funds
• InvITs (Infrastructure Investment Trusts)
• REITs (Real Estate Investment Trusts)

These instruments become more attractive with higher foreign inflows, offering retail investors exposure to global-grade assets.

Also Read: Tata Motors Reduces Car Prices by Up to ₹1.55 Lakh After GST Cut!

Rising Foreign Investments

The policy is already showing results. Direct investments by SWFs and pension funds almost doubled to $6.7 billion in 2022 from $3.8 billion in 2021. Assets under custody in Indian companies also jumped 60% year-on-year to ₹4.7 lakh crore by April 2024.

Conclusion

Extending the tax exemption till 2030 cements India’s status as a long-term hub for global infrastructure investments. While sovereign wealth and pension funds benefit directly, retail investors also gain access through mutual funds, InvITs, and REITs. The move is expected to attract more foreign capital, enhance transparency, and strengthen India’s infrastructure financing ecosystem.

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