Budget 2025 Proposes Extension of Special Tax Exemptions for Global Sovereign Wealth and Pension Funds Investing in Infrastructure
Budget 2025 extends tax exemptions for Sovereign Wealth and Pension Funds, allowing investments in India's infrastructure sector until March 2030
Budget 2025 – Pension funds tax exemptions – Budget 2025 foreign investment – Tax exemptions for pension funds – taxscan
Budget 2025 – Pension funds tax exemptions – Budget 2025 foreign investment – Tax exemptions for pension funds – taxscan
The Union Budget 2025 has introduced important changes to encourage foreign investment in India’s infrastructure sector. The government has extended the deadline for Sovereign Wealth Funds (SWFs) and Pension Funds (PFs) to invest in India while also restoring key tax exemptions on their capital gains.
More Time for Investment
● The deadline for SWFs and PFs to invest in India with tax benefits has been extended from March 31, 2025, to March 31, 2030.
● This extension will allow global investors more time to plan their investments in India’s growing infrastructure sector.
Read More: [BREAKING] No Income Tax upto Rs. 12 Lakh Income, proposes FM during Budget 2025
Fixing Taxation Issues on Capital Gains
● In Finance (No. 2) Act, 2024, the government changed tax rules under Section 50AA, making all capital gains from unlisted debt securities taxable as short-term capital gains, regardless of how long they were held.
● This removed the earlier tax exemption on long-term capital gains for SWFs and PFs, making their investments taxable.
● The Budget 2025 fixes this issue by amending Clause (23FE) of Section 10 to ensure that long-term capital gains from unlisted debt securities will remain tax-exempt, even if they are deemed short-term under Section 50AA.
Union Budget 2025: In-Depth Analysis for Strategic Insights - Click Here
Infrastructure projects require long-term investment, and foreign funds are crucial in financing them. The earlier tax change discouraged investment by making these funds liable to pay tax on their capital gains.
By extending the deadline and restoring tax exemptions, the government makes India a more attractive destination for global investors. More investment in infrastructure will help develop better roads, railways, power plants, and urban projects, boosting economic growth and job creation.
Read More: Union Budget 2025: Key Highlights
Foreign investors now have a stable and extended time frame to plan their investments. India benefits from more infrastructure funding, supporting the country’s goal of becoming a $5 trillion economy. Tax relief on capital gains will encourage more participation from global funds, leading to faster and better infrastructure development.
These changes will take effect from April 1, 2025, once the Finance Bill 2025 is passed.
To Read the full text of the Finance Bill CLICK HERE
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