In line with the objective to promote the long term investments and add fuel to India’s growth story of Infrastructure sector, the Finance Act, 2020 had amended the Income Tax Act, 1961 and inserted a new section 10(23FE) to grant  100% income-tax exemption to the income of a notified SOVEREIGN WEALTH FUND (‘SWF’)  in respect of its investment made in the specified infrastructure sectors on or before March 31, 2024.

The Indian Government has recently (on May 05, 2021) vide various notifications* granted tax exemptions to 5 SWFs based in Singapore.

The 5 SWFs are :

1. Bricklayers Investment Pte. Ltd.,

2. Anahera Investment  Pte. Ltd.,

3. Dagenham Investment Pte. Ltd.,

4. Stretford Investment Pte. Ltd. and

5. Chiswick  Investment  Pte.  Ltd.

As mentioned in the aforesaid notifications, 100% income-tax exemption has been provided to these SWFs on any income from interest, dividend and long-term capital gains arising from an investment made by such SWF on or before the March 31, 2024 subject to the fulfilment of specified conditions therein.

The audit report format has been prescribed for filing by the SWFs.

All the notifications prescribe certain conditions which the funds will have to fulfil to get the exemption. These conditions are around filing of tax returns, getting their accounts audited, furnishing quarterly statements, being regulated by Government of Singapore etc. Brief of such conditions are enlisted below:

1. Mandatory filing of income tax return in India,

2. Mandatory Audit by a Chartered Accountant.

3. Filing of  a quarterly statement electronically in Form II in respect of each investment made during the said quarter

4. The Fund shall maintain a segmented account of income and expenditure in respect of investment eligible for exemption under section 10(23FE) of the Income Tax Act, 1961.

5. The SWF shall continue to be owned and controlled, directly or indirectly, by the Government of Singapore and continue to be regulated under the law of the Government of Singapore.

6. The income of the SWF shall be credited either to the account of the Government of Singapore or to any other account designated by that Government.

7. The  SWF  shall  not  have  any  loans  or  borrowings for the purposes of making investment in India.

8. The asset of the SWF shall vest in the Government of Singapore upon dissolution barring any payment made to creditors or depositors for loan taken or borrowing.

9. The Fund shall not participate in the day to day operations of investee.

The notifications also states that violation of any of the conditions as stipulated in section 10(23FE) and these notifications shall render the said Fund ineligible for the tax exemption.

Earlier the Government has granted similar exemptions to few Pension Funds. Such incentives will certainly boost the investments in Infrastructure segment and provide the much required impetus to the speedy development and timely completion of ongoing projects in the relevant space.

Also, the long term investment commitments coming in from such foreign SWFs reflects the interest and trust of the large international funds in Indian Growth Story despite the impact of Pandemic.


Notification No. 51/2021, Notification No. 52/2021, Notification No. 53/2021, Notification No. 54/2021 and Notification No. 55/2021 all dated 5th May 2021.

Author: CA. Ritesh Podar, Mumbai, Maharashtra.  He can be reached at [email protected] or 9833014637.

(The views expressed are personal.)

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June 2021