CBDT vide Notification No. 43/2021, Notification No. 44/2021, Notification No. 45/2021 and vide Notification No. 46 /2021 all dated 4-5-20321 has notified 4 pension funds namely, Caisse de dépôt et placement du Québec, CDPQ Infrastructures Asia III Inc., Ivanhoe Logistics India Inc. and CDPQ Fixed Income XI Inc. respectively as eligible Pension Fund for the purpose of availing exemption under section 10(23FE) of the Income Tax Act, 1961 (“Act”). The notified funds shall be eligible to claim full tax exemption in respect of investment made in India on or before 31-03-2024 subject to prescribed conditions.
The conditions include filing income tax returns in India and quarterly disclosure of investments. There is a three-year lock-in period for the investments. Investors will get 100% tax exemption on income from interest, dividend and long-term capital gains arising from their investments in India.
Clause 23FE of Section 10 of the Act exempts the income of a specified person in the nature of dividend, interest, or long-term capital gain arising from an investment made by the specified person in India in the form of debt or share capital or unit. The exemption will be allowed only if such investment is made between 1st April 2020 and 31st March 2024 and held for at least three years.
For this purpose, “specified person” in the context of a pension fund, means a pension fund, which—
(i) is created or established under the law of a foreign country including the laws made by any of its political constituents being a province, State or local body, by whatever name called;
(ii) is not liable to tax in such foreign country;
(iii) satisfies such other conditions as may be prescribed; and
(iv) is specified by the Central Government, by notification in the Official Gazette, for this purpose;
The Central Government utilizing its power conferred by sub-clause (iv) of clause (c) of Explanation 1 to clause (23FE) of section 10 of the Act specified Caisse de dépôt et placement du Québec, CDPQ Infrastructures Asia III Inc., Ivanhoe Logistics India Inc. and CDPQ Fixed Income XI Inc. eligible for availing exemption under section 10(23FE).
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