CBDT vide Notification No. 44/2020 dated 06.07.2020 widens the definition of infrastructure under section 10(23FE) to align it with Harmonised List of Infrastructure notified by Department of Economic Affairs (DEA).
During the Budget 2020 speech, the Finance Minister announced that in order to incentivize the investment by the Sovereign Wealth Fund of foreign governments in the priority sectors, it is proposed to grant 100% tax exemption to their interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before 31st March 2024 and with a minimum lock-in period of 3 years.
In order to promote investment of sovereign wealth fund, including the wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA), it is proposed to insert a new clause in the said section so as to provide an exemption to any income of a specified person in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India, whether in the form of debt or equity, in a company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating or maintaining any infrastructure facility as defined in Explanation to clause (i) of sub-section (4) of section 80-IA of the Act or such other business as may be notified by the Central Government in this behalf. In order to be eligible for the exemption, the investment is required to be made on or before 31st March, 2024 and is required to be held for at least three years.
Section 10(23FE) of the Income Tax Act, 1961, as inserted by the Finance Act, 2020, provides for an exemption to the specified income of certain entities including notified Sovereign Wealth Fund (SWF) & Pension Funds (PF) from investment in specified infrastructure sectors.
Abu Dhabi Investment Authority (ADIA), which is a sovereign wealth fund, is expressly covered in the Act itself within the meaning of specified person whereas in case of other sovereign wealth funds, the same needs to be notified by the Government of India in its official gazette for claiming the tax concessions.
Now, CBDT vide Notification No. 44/2020 dated 06.07.2020 has widened the definition of infrastructure under section 10(23FE) to align it with Harmonised List of Infrastructure notified by DEA. The Notification is issued by exercising the powers conferred to it under section 10(23FE)(iii)(b).
This will encourage investment from certain entities including notified Sovereign Wealth Funds & Pension Funds in a wide range of infrastructure as per the List.
Read the full text of the Notification No. 44/2020 dated 06.07.2020 on Harmonised List of Infrastructure under section 10(23FE)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 6th July, 2020
INCOME-TAX
S.O. 2227E).—In exercise of the powers conferred by item (b) of sub-clause (iii) of clause (23FE) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies business, for the purposes of said item (b), to be the business which is engaged in the infrastructure sub-sectors mentioned in Updated Harmonised Master List of Infrastructure Sub-sectors in the notification of the Government of India in the Ministry of Finance, Department of Economic Affairs, published in Gazette of India, Extraordinary, vide number, F.No.13/3/2017-INF dated 13th August, 2018.
2. The reference to the infrastructure sub-sectors in the said Harmonised Master List of Infrastructure Sub-sectors shall not include the business already provided in the said item (b).
3. This notification shall come into force from the 1st day of April, 2021 and shall be applicable for assessment year 2021-22 and subsequent assessment years.
[Notification No. 44/2020/F. No. 370142/24/2020-TPL]
NEHA SAHAY, Under Secy.
(Tax Policy and Legislation Division)
Download Copy of Notification No. 44/2020 dated 06.07.2020 on Harmonised List of Infrastructure under section 10(23FE) in pdf format.
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