New Delhi: The Central Board of Direct Taxes (CBDT) has granted tax exemption to Canada’s Pension Fund–276522 Ontario Limited and 2452991 Ontario Limited- for their income from infrastructure investments in India, showed two separate notifications. Huh.
The move is part of India’s efforts to attract investment in infrastructure. The tax break is applicable for investments made up to March 2024.
The government earlier this year extended similar tax incentives to several pension and sovereign wealth funds to help attract investment and boost economic growth. The stimulus will help finance some of the nearly 7,000 projects that are part of the national infrastructure pipeline. Other entities that were given tax breaks include Canadian pension fund CDPQ Fixed Income XI Inc., Ivanhoe Logistics India Inc., CDPQ Infrastructure Asia III Inc., and Cais de dépt et placement du Québec.
Tax break is given under section 10 of the Income Tax Act which deals with income which is not counted in total income.
Investors get full tax exemption on income from interest, dividends and long-term capital gains from their investments in India. The tax breaks given to these entities point towards the interest of sovereign wealth funds and pension funds on India’s infrastructure sector.
India’s identified infrastructure projects are worth ₹111 trillion.
The Narendra Modi administration is betting on the multiplier effect that infrastructure investments can help create new jobs and transform the economy.
Entities seeking tax exemption under this provision will have to comply with certain conditions, including filing of income tax returns and quarterly disclosure of investments made in India. There is a lock-in period of three years for investment.
Violation of conditions makes investors ineligible for tax exemption, says CBDT
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