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Infrastructure debt funds (IDF) set up under the NBFC route will now be able to invest in more projects, thanks to new tax breaks coming their way.
The Central Board of Direct Taxes (CBDT) has widened the scope of tax exemption for IDF-NBFC.
There is, however, no relaxation in the current norm that requires infrastructure projects to have completed one year of commercial operation for the incomes to be tax exempt at the hands of IDF-NBFCs.
With the latest CBDT move, IDF-NBFCs can invest in projects where the government participation is limited and also in sectors where no project authority exists.
According to the latest CBDT move, income tax exemption would be available even for incomes arising from investments in non-PPP projects and also PPP project without a project authority.
“The latest CBDT move to amend the income tax rules is in consonance with the amendments made by the RBI to its IDF-NBFC guidelines earlier this year in May,” Rahul Jain, Partner, Nangia & Co, a CA firm, told BusinessLine here.
Benefiting sectors This is a very welcome step as the scope of exemption has been widened even to projects with limited government participation or oversight, he said, adding that sectors such as logistics, townships, Special Economic Zones will benefit from this move.
Prior to the latest CBDT move, tax exemption was available to IDF-NBFC only for investments in Public Private Partnership (PPP) and where the IDF was party to the tripartite agreement with the concessionaire and the project authority.
In May this year, the Reserve Bank of India (RBI) had allowed IDF-NBFCs to invest in non-PPP projects as well as PPP projects where there was no project authority provided that such infrastructure projects had satisfactorily completed one year of commercial operation.
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