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UAE sovereign fund first to get 100% I-T exemption on India investments

Abu Dhabi’s Sovereign Wealth Fund (SWF) – MIC Redwood 1 RSC has become the first foreign SWF to be notified and granted 100 percent tax exemption for long-term investments to be made in specified priority sectors in India, the Finance Ministry said on November 3.

As per the Central Board of Direct Taxes (CBDT) notification on November 2, the SWF has gained 100 percent exemption from income tax (I-T) on income from interest, dividend and long-term capital gains as per the Finance Act, 2020, ANI reported.

A statement from the board said the exemption facility has been “well received by global SWFs and pension funds… and a large number have shown interest in making an investment in India’s infrastructure sector.”

A senior official told the agency that notification process for Abu Dhabi SWF was completed “in record time” to expedite foreign investment in India’s priority areas during the pandemic.

Moneycontrol could not independently verify the report.

As per the official, the SWF sought the tax exemption on September 18 as per CBDT guidelines and deliberations on the same were held through video conferences and emails. Final replies from MIC Redwood 1 RSC for the process were sent on October 20.

“After that, the process of notification including consultation with Ministry of Law and Justice for legal vetting of the notification etc. has been completed in less than two weeks,” he stated.

The Centre had on July 6 issued a notification broadening the scope of the tax exemption to be granted to SWFs and notified foreign pension funds (under prescribed conditions) for investment in priority sectors through the Finance Act, besides creating sub-sectors of Harmonised Master List of the infrastructure eligible for this income tax exemption. Money Control

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