Government extends tax sops for infra investment sovereign funds by 5 years

Govt extends the exemption for SWFs and Pension funds making infra investments in India

The central government has extended the special tax exemption available for global Sovereign Wealth Funds(SWFs) and Pension funds investing in the infrastructure sector of the country. In the Union Budget for FY26, the government has extended the tax sops for next five years. The scheme provides exemption on dividend income, interest income and long-term capital gains accrued on infrastructure investments made by these foreign funds in India. The scheme which was launched in 2020 was to elapse on March 31,2025. The government has now extended the scheme till 31 March,2030.

The development assumes significance as several leading SWFs have used this regime to make investments in the infrastructure space. Marquee SWFs, including Abu Dhabi Investment Authority (ADIA) and the Canada Pension Plan Investment Board (CPPIB), are among those who received the exemption, various notifications of the tax department showed. To be sure, these benefits do not automatically apply to all the SWFs or pension funds. To be eligible, the Centre has to issue a notification providing the exemption.

“Suggestions have been received that given the long-term nature of infrastructure investments and the role of foreign SWFs and PFs in financing such projects, the deadline for investment under clause (23FE) of section 10 be extended. This will provide the stability and time frame necessary for global investors to make substantial contribution to India’s infrastructure development.” Said the budget documents.