NEW DELHI: The Indian government has granted full income tax exemption on investments made by thUnited Arab Emirates’ sovereign wealth fund MIC Redwood 1 RSC Ltd. in the country’s infrastructure and other priority sectors, said an official notification.
The finance ministry had notified the tax incentive on Monday, subject to riders such as filing tax returns and maintaining segment accounts.
The decision is in line with the provisions of the Finance Act meant to encourage investments in India’s infrastructure sector by sovereign wealth funds. To avail the benefit, investments must be made by 31 March, 2024, and are required to be held for at least three years.
MIC Redwood 1 RSC Ltd. has been provided full tax exemption on income from interest, dividend and long-term capital gains for its investments. It has become the first notified sovereign wealth fund to get this benefit. A large number of sovereign wealth funds and pension funds have shown interest in India’s infrastructure sector, said a government official, who spoke on condition of anonymity.
Notified foreign pension funds are also given similar exemption, subject to conditions.
The government has been encouraging investments in the infrastructure sector in view of the multiplier effect it can have in economic growth. The processing of the company’s application made on 18 September was done swiftly, the official said.