<p>The government has waived the three-year lock-in period on investments made by non-residents in infrastructure debt funds (IDFs), to promote funding in the infrastructure sector.</p>.<p>A notification in this regard has been issued by the Central Board of Direct Taxes (CBDT).</p>.<p>With an aim to accelerate and enhance the flow of long-term debt in infrastructure projects, amendments in the tax laws were made to provide an exemption from income tax to infrastructure debt funds (IDFs) in 2011.</p>.<p>To attract off-shore investments into IDFs, any amount of interest received by non-resident or foreign company from investment in such IDFs is charged at a reduced tax rate of 5 per cent, said Taxmann Deputy General Manager Naveen Wadhwa.</p>.<p>IDFs are investment vehicles to accelerate the flow of long-term debt to the sector.</p>.<p>Wadhwa said if a non-resident transfers rupee-denominated bonds of IDF to another non-resident outside India, such transfer is not regarded as transfer for the purpose of capital gain, and no capital gain tax is charged on such transfer.</p>.<p>However, all these benefits are available only when IDF is set up as per the prescribed guidelines and fulfill the required conditions.</p>.<p>One of such conditions was that the investment made by a non-resident in bonds should be subject to a lock-in period of three years except where the transfer is made to another non-resident.</p>.<p>"In order to further boost foreign investment in the infrastructure sector, the government has decided to remove the said lock-in period. Thus, non-resident investors would now be able to freely transfer the bonds of IDFs," Wadhwa said.</p>.<p>Leena Chacko, the partner at Cyril Amarchand Mangaldas, said the CBDT's decision will make investments in bonds issued by IDF more attractive for offshore investors.</p>.<p>Earlier this month, the government has set out a plan to invest Rs 100 lakh crore in the infrastructure sector by 2024-25.</p>.<p>A task force headed by the economic affairs secretary has been set up to identify infrastructure projects for the investment.</p>.<p>The challenge is to step up annual infrastructure investment so that lack of infra does not become a binding constraint on the growth of the Indian economy, the finance ministry had said while constituting the task force.</p>
<p>The government has waived the three-year lock-in period on investments made by non-residents in infrastructure debt funds (IDFs), to promote funding in the infrastructure sector.</p>.<p>A notification in this regard has been issued by the Central Board of Direct Taxes (CBDT).</p>.<p>With an aim to accelerate and enhance the flow of long-term debt in infrastructure projects, amendments in the tax laws were made to provide an exemption from income tax to infrastructure debt funds (IDFs) in 2011.</p>.<p>To attract off-shore investments into IDFs, any amount of interest received by non-resident or foreign company from investment in such IDFs is charged at a reduced tax rate of 5 per cent, said Taxmann Deputy General Manager Naveen Wadhwa.</p>.<p>IDFs are investment vehicles to accelerate the flow of long-term debt to the sector.</p>.<p>Wadhwa said if a non-resident transfers rupee-denominated bonds of IDF to another non-resident outside India, such transfer is not regarded as transfer for the purpose of capital gain, and no capital gain tax is charged on such transfer.</p>.<p>However, all these benefits are available only when IDF is set up as per the prescribed guidelines and fulfill the required conditions.</p>.<p>One of such conditions was that the investment made by a non-resident in bonds should be subject to a lock-in period of three years except where the transfer is made to another non-resident.</p>.<p>"In order to further boost foreign investment in the infrastructure sector, the government has decided to remove the said lock-in period. Thus, non-resident investors would now be able to freely transfer the bonds of IDFs," Wadhwa said.</p>.<p>Leena Chacko, the partner at Cyril Amarchand Mangaldas, said the CBDT's decision will make investments in bonds issued by IDF more attractive for offshore investors.</p>.<p>Earlier this month, the government has set out a plan to invest Rs 100 lakh crore in the infrastructure sector by 2024-25.</p>.<p>A task force headed by the economic affairs secretary has been set up to identify infrastructure projects for the investment.</p>.<p>The challenge is to step up annual infrastructure investment so that lack of infra does not become a binding constraint on the growth of the Indian economy, the finance ministry had said while constituting the task force.</p>