Abu Dhabi Sovereign Fund First to Get 100% Tax Exemption in Infra

Business Standard Abu Dhabi sovereign fund first to get 100% tax exemption in infra

It is the first foreign SWF to get 100 per cent tax exemption in the case of income from interest, dividend, and long-term capital gains for its investment in infrastructure.

In line with the Budget announcement, the government has allowed income-tax exemption to Abu Dhabi’s sovereign wealth fund (SWF), MIC Redwood 1 RSC, for making long-term investments in India in specified priority sectors of infrastructure.

It is the first foreign SWF to get 100 per cent tax exemption in the case of income from interest, dividend, and long-term capital gains for its investment in infrastructure.

The Central Board of Direct Taxes (CBDT) on Monday announced this.

The government, under the Finance Act, 2020, had allowed tax exemption for SWFs and pension funds in the case of incomes from investment in 34 key infrastructure sectors, including hotels, cold chains, educational institutions, hospitals, and gas pipelines.

Under the scheme, investment has to be made before March 31, 2024 and with a minimum lock-in period of three years.

“Any income in the nature of dividend, interest, or LTCG (long-term capital gains) arising from an investment made by Abu Dhabi’s SWF on or after November 2, 2020, but on or before March 31, 2024, shall be entitled to exemption if specified conditions are met,” said a government official.

The sub-sectors under the scheme include infrastructure for special economic zones, textile parks and agriculture markets, telecom towers, electricity generation, and transmission and distribution, besides ports and airports.