Sec. 10(23FE) exemption is available only if source of investment in India is not from any borrowings: CBDT

  • Blog|Income Tax|News|
  • |
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 28 October, 2021

Income Tax Act Sec. 10(23FE) Exemption

Circular No. 19/2021, dated 26-10-2021

Section 10(23FE) provides an exemption to sovereign wealth funds and pension funds (specified fund) on their income like dividend, interest, and long-term capital gains arising from investment in infrastructure in India made between 01.04.2020 and 31.03.2024 subject to fulfillment of certain conditions.

The Finance Act, 2021, inter alia, inserted the seventh proviso to section 10(23FE) to provide that in case the specified fund has loans or borrowings, directly or indirectly, for the purposes of making the investment in India, such fund shall be deemed to be not eligible for exemption.

Concerns have been raised with regards to the term ‘indirectly’ as same has not been defined. There was no clarity that if the specified fund or its holding entity or any other entity in the chain of holding or any associate thereof (group concern) has any loans or borrowings, the specified fund may be ineligible to get the exemption or not?.
In order to remove such difficulties, the Central Board of Direct Taxes (CBDT) has issued the following clarifications:

(a) If the loans and borrowings have been taken by the specified fund or any of its group concerns, specifically for the purposes of making an investment by the specified fund in India, such fund shall not be eligible for exemption; and

(b) If the loans and borrowings have been taken by the specified fund or any of its group concern, not specifically for the purposes of making investment in India, it shall not be presumed that the investment in India has been made out of such loans and borrowings. Accordingly, such specified fund shall be eligible for exemption under section 10(23FE), subject to the fulfilment of all other conditions. However, the source of the investment in India by such specified fund shall not be from such loans and borrowings.

Click Here to Read the Full Notification

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied