CBDT gives exemption to Abu Dhabi’s sovereign wealth fund MIC Redwood for investments


The Central Board of Direct Taxes (CBDT) has exempted dividend, interest and long term capital gains made by sovereign wealth fund MIC Redwood 1 RSC Limited, Abu Dhabi, United Arab Emirates in India from income tax subject to certain conditions.

The exemption has been given under the clause 23 FE of section 10 of the Income Tax Act which allows sovereign wealth funds to invest in infrastructure projects in India subject to conditions including prohibition from undertaking any commercial activity within or outside India.

Exemption will be allowed on investments made by the fund till March 31, 2024, the CBDT said in a notification dated November 2.


The fund will have to fulfill several other conditions to get the exemption, including filing of income tax returns for the years that the investment is made till the time its liquidated, auditing of its books, quarterly statement of investments besides a segmented account of income and expenditure in respect of such

investment which qualifies for exemption.

The fund will continued to be owned and controlled, directly or indirectly, by the Government of the Abu Dhabi at all times and will be regulated under the law of the Government of Abu Dhabi.

No portion of the earnings will be credited to any private person, the conditions state further.

The fund will not have any loan, borrowing, advances, deposits or investment in it of any kind directly or indirectly from any person other than the Government of the Abu Dhabi, while only surplus fund of the Government of Abu Dhabi can be invested into the fund. A monitoring mechanism to protect the investment will have to be set up by the fund, but it will not manage or control daily operations or appoint executive directors.

The conditions also bar the fund from carrying out asset management for a third party.

India has permitted investments by sovereign wealth funds, the Abu Dhabi Investment Authority and pension funds from other countries in 34 odd categories of infrastructure projects with the addition of affordable rental housing complexes in August.

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