• Source:JND
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The central government on Saturday reportedly extended the tax exemption for sovereign wealth funds (SWFs) and pension funds for the next five years. The Department of Revenue formalised the announcement made in the Union Budget, adding that such entities will be able to claim benefits on eligible investments made in India till March 31, 2030, reported the Economic Times. The report suggested that the specified SWFs and pension funds will be allowed to claim tax relief in several categories, including tax relief on income from dividends, interest, and long-term capital gains from investment in India.

Earlier, the central government had introduced sections under the Income Tax Act to exempt such entities from tax on long-term capital gains, interest, and dividends from investment in several sectors of the country. The exemption was announced to boost certain infrastructure projects ongoing in several states. The department had stated that several new announcements will be made in the upcoming months to boost the infrastructure and other ambitious projects.

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While reacting to the decision, several experts stated that the tax exemption will benefit the SWFs. However, the others also pointed out that the duration could have been longer. They further stated that the longer exemption tenure will align with the ongoing infrastructure projects.

"While it's a move that will be welcomed by the infrastructure sector and infrastructure funds, given the long haul of these projects and India's long-term aspirations, the extension should have been considered for a longer duration as the investment needs are most likely not to be met in one year," an expert was quoted as saying by the Economic Times.

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Earlier, the tax exemption period was only valid for investments in these projects until March 31, 2024. However, the central government had extended it to March 31, 2025, in the interim budget of 2024-25.