Budget 2020-21 + FINANCE BILL, 2020

Exemption in respect of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority and Sovereign Wealth Fund.

Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances.

In order to promote investment of sovereign wealth fund, including the wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA), it is proposed to insert a new clause in the said section so as to provide exemption to any income of a specified person in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India, whether in the form of debt or equity, in a company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating or maintaining any infrastructure facility as defined in Explanation to clause (i) of sub-section (4) of section 80-IA of the Act or such other business as may be notified by the Central Government in this behalf.

In order to be eligible for exemption, the investment is required to be made on or before 31st March, 2024 and is required to be held for at least three years.

For the purpose of this exemption, “specified person” is proposed to be defined to mean,-

(a) a wholly owned subsidiary of the ADIA, which is a resident of the United Arab Emirates (UAE) and which makes investment, directly or indirectly, out of the fund owned by the Government of the United Arab Emirates; and

(b) a sovereign wealth fund which satisfies the following conditions:

A. It is wholly owned and controlled, directly or indirectly, by Government of a foreign country;

B. It is set up and regulated under the law of the foreign country;

C. Its earnings are credited either to the account of the Government of the foreign country or to any other account designated by that Government such that no portion of the earnings inures any benefit to any private person;

D. Its asset vest in the Government of the foreign country upon dissolution;

E. It does not undertake any commercial activity whether within or outside India; and

F. It is notified by the Central Government in the Official Gazette for this purpose.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clause 7]

 

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Budget 2020-21 + FINANCE BILL, 2020

Exemption for sovereign wealth fund investments: dividends, interest and long-term capital gains eligible if conditions satisfied. A new exemption applies to income in the nature of dividend, interest and long-term capital gains of a specified person arising from investments, debt or equity, in Indian companies or enterprises engaged in developing, operating or maintaining infrastructure facilities or other notified businesses, provided the investment is made on or before the prescribed cut-off and held for the minimum required period. 'Specified person' includes a wholly owned ADIA subsidiary resident in the UAE and sovereign wealth funds satisfying defined ownership, regulatory, benefit, vesting, commercial activity and notification conditions.