Little Known Ways to Notification No. 44/2020- Income Tax

The income tax department has released a notification allowing sovereign wealth funds and foreign pension funds to benefit from income tax exemption on their expenditure in Indian assets with a view to attracting further investment into the country. The tax exemption applies to the income from interest, dividends, and capital gains.

CBDT widens the definition of infrastructure u/s10(23FE)(iii)(b) to align it with Harmonised List of Infrastructure notified by DEA.

Section 10(23FE)(iii)(b)

A company or enterprise or an entity carrying on the business of developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility as defined in the explanation to clause (i) of sub-section (4) of section 80-or such other business as the Central Government may, by notification in the Official Gazette, specify in this behalf; or

Analysis of Notification

The Central Board of Direct Taxes (CBDT) expanded the scope of 'infrastructure' in a notification to claim income tax exemption under section 10 (23FE) of the I-T Act introduced through the Finance Act 2020. The aforementioned Provision provides for a complete tax deduction on their revenue sources of some special groups of non-resident holders, such as dividends, interest and capital gains.

This notification shall come into force from April 1, 2021, and shall be applicable for the assessment year (AY) 2021-22 and subsequent AYs.

Finance Minister Nirmala Sitharaman announced tax exemption for such investment in India's infrastructure in Budget 2020.

"In order to promote investments made in priority sectors by the sovereign wealth fund of foreign governments, I intend to give a 100 % tax exemption to their profit, dividend and capital gains income in respect of investments made in infrastructure and other approved sectors before March 31, 2024, and with a fixed 3-year lock-in term," she added.

The CBDT notification aligns the definition of "infrastructure facility" with the 2018 Department of Economic Affairs' harmonized master list.

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(Research - https://taxguru.in/, https://www.livemint.com/)

(Source -Twitter, Income Tax India)