Section - 10(23FE) (of Income Tax Act, 1961), Income-tax Act

Any income of a specified person in the nature of dividend interest any sum referred to in clause (xii) of sub-section (2) of section 56 (of Income Tax Act, 1961) or long-term capital gains arising from an investment made by it in India whether in the form of debt or share capital or unit if the investment—

(i) is made on or after the 1st day of April, 2020 but on or before the 31st day of March 2024;

(ii) is held for at least three years; and

(iii) is in—

(a) a business trust referred to in sub-clause (i) of clause (13A) of section 2 (of Income Tax Act, 1961); or

(b) a company or enterprise or an entity carrying on the business of developing, or operating and maintaining or developing operating and maintaining any infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA (of Income Tax Act, 1961) or such other business as the Central Government may, by notification in the Official Gazette specify in this behalf; or

(c) a Category-I or Category-II Alternative Investment Fund regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) having 10[not less than fifty per cent investment in one or more of the company or enterprise or entity referred to in item (b) or item (d) or item (e) or in an Infrastructure Investment Trust referred to in sub-clause (i) of clause (13A) of section 2 (of Income Tax Act, 1961); or

(d) a domestic company set up and registered on or after the 1st day of April, 2021 having minimum seventy-five per cent investments in one or more of the companies or enterprises or entities referred to in item (b); or

(e) a non-banking financial company registered as an Infrastructure Finance Company as referred to in notification number RBI/2009-10/316 issued by the Reserve Bank of India or in an Infrastructure Debt Fund, a non-banking finance company, as referred to in the Infrastructure Debt Fund - Non-Banking Financial Companies (Reserve Bank) Directions 2011, issued by the Reserve Bank of India having minimum ninety per cent lending to one or more of the companies or enterprises or entities referred to in item (b):

Provided that if any difficulty arises regarding interpretation or implementation of the provisions of this clause the Board may with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty:

Provided further that every guideline issued under the first proviso shall be laid before each House of Parliament and shall be binding on the income-tax authority and the specified person:

Provided also that where any income has not been included in the total income of the specified person due to the provisions of this clause and subsequently during any previous year the specified person fails to satisfy any of the conditions of this clause so that the said income would not have been eligible for such non-inclusion such income shall be chargeable to income-tax as the income of the specified person of that previous year:

Provided also that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent in one or more of the companies or enterprises or entities referred to in item (b) or item (d) or item (e) of the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of the said sub-clause income accrued or arisen or received or attributable to such investment directly or indirectly which is exempt under this clause shall be calculated proportionately to that investment made in one or more of the companies or enterprises or entities referred to in item (b) or item (d) or item (e) of the said sub-clause or in the Infrastructure Investment Trust referred to in item (c) of the said sub-clause in such manner as may be prescribed:

Provided also that in case a domestic company referred to in item (d) of sub-clause (iii) has investment of less than one hundred per cent in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause income accrued or arisen or received or attributable to such investments directly or indirectly which is exempt under this clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause in such manner as may be prescribed:

Provided also that in case a non-banking finance company registered as an Infrastructure Finance Company or Infrastructure Debt Fund referred to in item (e) of sub-clause (iii) has lending of less than one hundred per cent in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause income accrued or arisen or received or attributable to such lending directly or indirectly which is exempt under this clause shall be calculated proportionately to the lending made in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause in such manner as may be prescribed:

Provided also that in case a sovereign wealth fund or pension fund has loans or borrowings directly or indirectly for the purposes of making investment in India such fund shall be deemed to be not eligible for exemption under this clause.

Explanation 1.—For the purposes of this clause "specified person" means—

(a) a wholly owned subsidiary of the Abu Dhabi Investment Authority which

(i) is a resident of the United Arab Emirates; and

(ii) makes investment directly or indirectly out of the fund owned by the Government of the Abu Dhabi;

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

(i) it is wholly owned and controlled directly or indirectly by the Government of a foreign country;

(ii) it is set up and regulated under the law of such foreign country;

(iii) the earnings of the said fund are credited either to the account of the Government of that foreign country or to any other account designated by that Government so that no portion of the earnings inures any benefit to any private person;

(iv) the asset of the said fund vests in the Government of such foreign country upon dissolution:

Provided that the provisions of sub-clauses (iii) and (iv) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;

(v) it does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in the day to day operations of the investee; and

(vi) it is specified by the Central Government by notification in the Official Gazette for this purpose and fulfils conditions specified in such notification;

(c) 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 or if liable to tax exemption from taxation for all its income has been provided by such foreign country:

(iii) satisfies such other conditions as may be prescribed;

(iiia) it does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of the investee; and

(iv) is specified by the Central Government, by notification in the Official Gazette, for this purpose and fulfils conditions specified in such notification.

Explanation 2.— For the purposes of this clause,—

(i) "investee" means a business trust or a company or an enterprise or an entity or a Category I or Category II Alternative Investment Fund or an Infrastructure Investment Trust or a domestic company or an Infrastructure Finance Company or an Infrastructure Debt Fund referred to in item (e) of sub-clause (iii) in which the sovereign wealth fund or the pension fund as the case may be has made the investment directly or indirectly under the provisions of this clause;

(ii) "loan and borrowing" means—

(a) any loan taken or borrowing by a sovereign wealth fund from or any deposit or investment made in a sovereign wealth fund by any person other than the Government of the country in which the sovereign wealth fund is set up;

(b) any loan taken or borrowing by a pension fund from or any deposit or investment made in a pension fund by any person but shall not include the deposit or investment which represents statutory obligations and defined contributions of one or more funds or plans established for providing retirement social security employment disability death benefits or any similar compensation to the participants or beneficiaries of such funds or plans as the case may be.

Explanation 3.—For the purposes of this clause the Central Government may prescribe that the method of calculation of "fifty per cent" referred to in item (c) or "seventy-five per cent" referred to in item (d) or "ninety per cent" referred to in item (e) of sub-clause (iii) shall be such as may be prescribed;