CBDT outlines conditions under which pension funds can avail exemptions from income tax


The Central Board of Direct Taxes (CBDT) Monday outlined various conditions under which pension funds can avail exemptions from income tax on income from investments in infrastructure companies via debt or equity.

Accordingly, pension funds cannot undertake commercial activity in India or overseas, should be regulated by laws of the country, province, state or local body where it is based and use the proceeds from investments to solely provide pensions or benefits on the lines of social security to its beneficiaries, the government said Monday.

Under the conditions, the fund investing in India will have to disclose all investments made here each quarter and file returns on the income earned from local investments. The Board also specified the forms to be used for submitting the disclosures.


“It is responsible for administering or investing the assets for meeting the 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,” the Board said in the notification issued Monday.

“No portion of the earnings or assets of the pension fund inures any benefit to any other private person,” it added.

India exempts sovereign wealth funds, the Abu Dhabi Investment Authority and pension funds from paying income tax on dividend, interest and long-term capital gains derived through investments made in infrastructure companies across sectors via debt or equity.

The Board had specified 34 infrastructure sectors in which the funds can make investments, in a notification in July.

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