Mumbai – Investments from sovereign wealth funds (SWFs) and pension funds could face challenges if the sunset clause extending tax benefits to such funds is not extended in this year’s Budget.
The government initially provided tax exemptions on income earned by these funds through Budget 2020, encouraging investments in specified infrastructure businesses. This incentive was applicable to investments made until March 31, 2024. Last year, the sunset clause was extended by a year to March 31, 2025.
Experts emphasize the importance of extending the sunset clause further to attract more investments from SWFs and pension funds. These funds play a crucial role in infrastructure development, and there is still untapped potential for investments in India.
The tax exemptions have had a positive impact on the infrastructure sector in India, leading to increased investments from global sovereign wealth funds. To sustain this interest, it is crucial to provide clarity and extend the tax benefits in the upcoming Budget.
Additionally, experts point out the need to exempt gains from debt instruments from taxation to attract more investments from SWFs and pension funds. This would ensure continued interest in investing in India’s growth story.
Overall, a clear policy framework and tax incentives are essential to enhance investments from SWFs and pension funds in India. The government’s decision on extending the sunset clause in the upcoming Budget will have a significant impact on the flow of investments in the country’s infrastructure sector.
