🔍 Overview
The Central Board of Direct Taxes (CBDT) has issued Notification No. 74/2025 – Income Tax on 11th July 2025, announcing an important amendment under Section 10(23FE) of the Income-tax Act, 1961. This section provides income-tax exemption to specified persons, mainly sovereign wealth funds (SWFs) and pension funds making eligible investments in India.
✅ What Has Been Amended?
The amendment modifies an earlier notification – S.O. 3952(E) dated 2nd November 2020, which granted exemptions to certain foreign funds only up to 31st March 2025.
📌 Key Change:
The exemption period under Section 10(23FE) has now been extended from 31st March 2025 to 31st March 2030.
This means the tax exemption benefit will now continue for an additional five years, encouraging continued long-term foreign investments in specified Indian infrastructure sectors.
👥 Who Is This For?
This notification specifically benefits “specified persons” as defined under Section 10(23FE) of the Income-tax Act. These include:
✅ Sovereign Wealth Funds (SWFs)
✅ Foreign Pension Funds
To be eligible, such funds must:
Be wholly owned by foreign governments.
Not be engaged in any commercial activity.
Be notified by the Indian government as eligible.
Invest in infrastructure-related sectors as defined under Indian law.
File necessary returns and statements as prescribed.
📌 Example of Entities Benefiting
As per this and prior notifications, some of the eligible entities include:
MIC Redwood 1 RSC Limited (Abu Dhabi)
Canadian Pension Plan Investment Board (CPPIB)
Abu Dhabi Investment Authority (ADIA)
Other sovereign wealth and pension funds notified by CBDT earlier.
These funds typically invest in Indian infrastructure such as:
Roads and Highways
Renewable Energy
Ports and Airports
Warehousing and Logistics
Gas Pipeline Networks, etc.
🗓️ Effective Date
The amendment is effective from 11th July 2025.
However, it is important to note that there is no retrospective benefit for the period between 1st April 2025 and 11th July 2025, unless separately clarified.
📈 Why This Amendment Matters
✅ Encourages Long-Term Foreign Investment
The extension aligns with India’s vision to attract long-term, patient capital in infrastructure development.✅ Policy Stability for Global Funds
Funds get certainty and planning horizon till FY 2029–30, enhancing confidence in India’s tax regime.✅ Boost to Infrastructure Sector
Infrastructure projects, especially those requiring large investments, benefit from access to low-cost international capital.
🏢 How Hemant Consulting Can Help
At Hemant Consulting, we provide end-to-end support for foreign and domestic investors, including:
✔️ Advisory on eligibility under Section 10(23FE)
✔️ Filing of necessary forms and compliance with conditions
✔️ Tax planning and documentation support
✔️ Structuring of investments to maximize tax benefits