Budget 2021 proposes Relaxation in conditions for Exemption to Sovereign Wealth Fund & Pension Fund [Read Finance Bill]

Budget 2021 - Sovereign Wealth Fund - Pension Fund - Taxscan

The  Finance Minister, Nirmala Sitharaman while announcing the Budget 2021-22 has proposed the relaxation in conditions for Exemption to Sovereign Wealth Fund & Pension Fund.

The government with the objective of attracting foreign investment in the infrastructure sector, granted 100% tax exemption, subject to certain conditions, to foreign Sovereign Wealth Funds and Pension Funds, on their income from investment in Indian infrastructure.

The government has noticed that few of such Funds are facing difficulties in meeting some of these conditions. In order to ensure that a large number of Funds invest in India, the Finance Minister proposed to relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure.

“In order to allow funding of infrastructure by issuing Zero-Coupon Bonds, I propose to make notified Infrastructure Debt Funds eligible to raise funds by issuing tax-efficient Zero-Coupon Bonds,” the Finance Minister said.

Mrs. Sitharaman has proposed to insert proviso so as to provide that in case a sovereign wealth fund or pension fund has loan or borrowing, directly or indirectly, for the purposes of making an investment in India, such fund shall be deemed to be not eligible for exemption.

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