New Delhi, Nov 3 (SocialNews.XYZ) India has granted tax free status to Abu Dhabi's Sovereign Wealth Fund (SWF) - MIC Redwood 1 RSC Ltd - to expedite foreign investment in the country's priority areas during the Covid pandemic.
With this, MIC Redwood has become the first foreign SWF that has been notified and granted 100 per cent income tax exemption for long-term investments to be made in the specified priority sectors in India.
A Finance Ministry statement said that India has gradually opened up the economy for FDI, except for a very few sectors, and has also extended a lot of tax concessions for sovereign funds to attract long-term investments in India's infrastructure sector.
MIC Redwood has been provided 100 per cent income tax exemption to income from interest, dividend and long-term capital gains for its investment in India's priority sector. This was part of the Finance Act, 2020.
Now with the Central Board of Direct Taxes (CBDT) notification, MIC Redwood became the first notified SWF which will be availing this exemption.
"This 100 per cent income tax exemption facility was well received by the SWFs and Pension Funds across the globe and a large number of SWFs and Pension Funds have shown interest in making investment in India's infrastructure sector."
The CBDT issued detailed guidelines on July 22 to facilitate the process of SWFs' notification. Notified foreign Pension Funds were also granted similar exemption subject to fulfilment of certain prescribed conditions.
An official closely in the know of the matter said that to expedite foreign investment in India's priority areas during the Covid pandemic time, the process of notification of MIC Redwood 1 RSC Ltd was completed in a record time.
On September 18, MIC Redwood 1 RSC Ltd made the application for seeking tax exemption notification as per the CBDT guidelines. Amidst the challenges of Covid-19, all deliberations and meetings between the applicant and tax authorities were held through video conferencing and communications were made only through emails.
MIC Redwood 1 RSC Ltd submitted its final replies on October 20 and after that the process of notification including consultation with Ministry of Law & Justice for legal vetting of the notification, etc, has been completed in less than two weeks, and with the completion of all legal and other formalities, the notification granting 100 per cent tax-exemption was issued on November 2.
The Indian government, in order to incentivise long-term investment by the SWFs of foreign governments in priority sectors, had granted through the Finance Act, 2020, a 100 per cent income tax exemption to income of a notified SWF in respect of its investment made in the specified infrastructure sectors.
The income tax exemption to SWFs and the Pension Fund is expected to provide much needed foreign funding to the infrastructure sector and will a go a long way in boosting the growth in the infrastructure sector.
The government had issued a notification on July 6 to broaden the scope of this exemption and made all sub-sectors of Harmonised Master List of the infrastructure eligible for this income tax exemption.
Source: IANS
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