Govt gives tax breaks to four more foreign funds to boost infra investments -

Govt gives tax breaks to four more foreign funds to boost infra investments

NEW DELHI: The government has granted tax exemption to four more foreign funds for their earnings from infrastructure investments made in India between now and March 2024.

The Central Board of Direct Taxes (CBDT) has in separate notifications granted the tax break to three pension funds—two from Canada and one from Australia–and to a UK development finance institution, subject to riders.

These investors are now eligible for relief under section 10 of the Income Tax Act which deals with earnings not to be included in the taxable income. Investors will get full tax exemption on income from interest, dividend and long-term capital gains.

The entities that have been given the tax break are Australian pension fund Government Employees Superannuation Board, pension fund OMERS Administration Corp. regulated under the law of the government of Ontario, Canada, UK’s CDC Group Plc and pension fund Public Sector Pension Investment Board that is regulated under the law of the Government of Canada, said the notifications.

Earlier this month, CBDT had granted tax exemption to four other pension funds and five sovereign wealth funds under a provision introduced through Finance Act 2020 which seeks to encourage infrastructure investments.

The idea is to help finance some of the nearly 7,000 projects that are part of the national infrastructure pipeline which is estimated to have a project cost of over 100 trillion.

The government is betting on the multiplier effect infrastructure investments could deliver in creating new jobs and in turning around the economy. It has also scaled up its capital spending. The Union budget for FY22 proposed a sharp 26% jump in capital spending in FY22 to 5.54 trillion over what was spent in the year before. The government is also pursuing a privatisation plan aimed at ushering in more private capital into different sectors.

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