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Government Extends Tax Exemption for SWFs and Pension Funds Until March 2030.

Economy Business | Dated: 14 Jul 2025

The Indian government has recently extended a five-year tax exemption for Sovereign Wealth Funds (SWFs) and Pension Funds (PFs) investing in infrastructure until March 31, 2030, under Section 10(23FE) of the Income‑tax Act. This strategic move aims to attract stable, long-term foreign capital into India’s key economic sectors.

🎯 Key Highlights:

  • - The extended tax benefit—applicable to dividends, interest, and long-term capital gains (LTCG)—was formalized in July 2025 by the Central Board of Direct Taxes (CBDT) via Notification No. 113/2025. It now ensures that even LTCG from unlisted debt, reclassified as short-term under Section 50AA, remains tax-exempt.

💡 Other Important Facts:

  • (i) Introduced in 2020, the exemption was initially set to expire in March 2024, but has been extended twice—first to March 2025 and now to March 2030. Over 35 funds including global investors like Saudi Arabia’s Public Investment Fund (PIF), Singapore’s GIC, Canada Pension Plan Investment Board (CPPIB), and Norway’s Sovereign Pension Fund, are notified beneficiaries.
  • (ii) This policy aligns with India’s broader strategy to support flagship projects like roads, ports, railways, renewable energy, and digital infrastructure. In 2022, SWF and PF investments in India rose to approximately US $6.7 billion, up from US $3.8 billion in 2021—showing strong investor response to tax stability.
  • (iii) Financial analysts view this extension as a clear signal of India’s investment-friendly stance, creating a stable, predictable tax environment for large institutional investors. It not only bolsters confidence in long-term infrastructure financing but also supports India’s ambition to transition into a $5 trillion economy by fostering sustainable growth.

📚 Test Your Knowledge:

Until which year has the Government of India recently extended tax exemptions for Sovereign Wealth Funds (SWFs) and Pension Funds (PFs)?

Correct Answer: 2030

🚀 Quick Recap: