The Finance Bill 2025 has extended the investment deadline for sovereign wealth funds (SWFs) and pension funds (PFs) in infrastructure projects to avail of tax exemptions on various incomes, like interest, dividend, and long-term capital gains. These were earlier required to invest by March 31, 2025 to avail of the benefits. However, it has now been pushed to March 31, 2030, offering a broader window for investment decisions. How it helps investors Explains Amit Bansal, Partner, Singhania Co., “For common investors, this move brings several indirect benefits. When infrastructure companies receive more investments, their stock performance improves, benefiting retail investors who have invested in the stock market.” “More funding for big projects also creates job opportunities, boosting incomes and consumption. Additionally, increased investments in infrastructure mean better roads, transportation, power supply, and overall economic growth, which improve our daily lives,” he adds. Key Updates In Finance Bill 2025 The key change in the current provisions is the extension of the deadline for these funds to invest while still availing tax benefits. Earlier, there was a time limit for such investments, but with this extension, more long-term and stable funds can flow into India's infrastructure sector. The primary goal behind this change is to attract global institutional investors who can provide sustained funding for infrastructure development, ensuring steady economic progress. By keeping these funds interested in the Indian market, the government aims to strengthen the foundation for long-term growth, which ultimately benefits businesses, workers, and individual investors alike. What's in it for Sovereign Funds? The amendments ensure that long-term capital gains arising from investments made by these “specified persons” in India remain tax-exempt. This exemption continues to apply even in cases where such gains might be deemed as short-term capital gains under section 50AA. Why this Matters The deadline extension gives global investors more time to evaluate and commit to India's infrastructure projects, recognizing the long-term nature of such investments. Policy Changes Changes in the Finance (No. 2) Act, 2024, reclassified all capital gains from unlisted debt securities, market-linked debentures, and specified mutual funds as short-term capital gains, regardless of the holding period. However, recognising the vital role of foreign SWFs and PFs in financing infrastructure projects, the government has carved out a special exception. Investment Framework Prior to these amendments, notified SWFs and PFs enjoyed exemptions on long-term capital gains from investments made in India, whether in debt or share capital units, under clause (23FE) of section 10. The new provisions ensure this tax certainty continues, maintaining the attractiveness of Indian infrastructure investments for these crucial global investors. The Big Picture This framework demonstrates the government’s commitment to creating a stable, predictable tax environment for international infrastructure investors while ensuring long-term support for India's development needs.Original Article