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of <h1>Clarifying clause (23FE) and rule 2DCA: exemption rules, holding periods, thresholds, breaches, and reporting for infrastructure investments</h1> Guidelines clarify exemption under clause (23FE) for 'specified persons' on dividend, interest and long-term capital gains from infrastructure investments, with rule 2DCA prescribing 50/75/90% thresholds and proportionate computation. Investments must be held three years; early transfers trigger taxation of previously exempt income and denial of capital-gain exemption. Hybrid entities carrying other businesses qualify proportionately if profit before tax from eligible activity is =50%, computed by specified formula and requiring segmented accounts. If an AIF/domestic company/NBFC later breaches the minimum thresholds, past exemptions remain for years when thresholds were met but income in the year of breach and thereafter is non-exempt; other material condition breaches generally cause withdrawal of exemption for prior years. Capital gains computation for downstream transfers uses fair market value on transfer dates and deemed cost rules. Secondary acquisitions during the specified period may qualify. Audit and quarterly reporting obligations may be limited to Indian and eligible investments where segmented accounts are maintained.
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