“During latest bilateral talks with India, a few of these nations have raised the difficulty of tax exemption with their Indian counterparts. The difficulty was additionally raised by means of exterior stakeholders through the ongoing consultations for the Union Budget 2024-25,” mentioned one of many folks.

For all infrastructure investments in India, funds managed by ADIA are exempt from paying taxes on dividends, curiosity revenue and long-term capital features, until March 2024.

Other SWFs get such exemptions solely on a case-by-case foundation for infrastructure investments, and “must be specified by the Indian authorities by the use of a notification for them to be eligible to say such an exemption,” mentioned Parul Jain, head of worldwide tax, Nishith Desai and Associates.

The different SWFs have now sought tax parity with ADIA. Mint couldn’t verify the identification of those funds. An electronic mail despatched to the finance ministry remained unanswered.

Market specialists say if the federal government extends these advantages to the opposite SWFs, then the funds would save 10-30% in taxes. The common or median fee of capital features tax for international funds is round 10-20% relying on the holding interval and the sector of funding. Plus, they may even not be topic to 10% tax deduction at supply (TDS) for dividends that they obtain.

“Given the potential of many SWFs from numerous jurisdictions seeking to put money into the Indian infrastructure sector, there’s a robust case for the federal government to contemplate extending the comfort to different SWFs, as it can additional encourage giant international investments into India,” Riaz Thingna, companion, Grant Thornton Bharat, mentioned.

The growth assumes significance as a number of funds from the Middle East are distinguished buyers in India. Apart from ADIA, SWFs from Kuwait, Qatar and Dubai are main buyers within the nation.

According to September 2023 information printed by division for promotion of trade and inner commerce (DPIIT), the United Arab Emirates (UAE) is the seventh-largest supply of international direct funding (FDI) in India, with cumulative investments of ₹1.16 trillion. Saudi Arabia is the nineteenth largest, with cumulative funding of ₹24,000 crore; Qatar is twenty fourth largest, with investments value 12,000 crore; and Oman is thirty eighth with new funding of ₹3,200 crore, information confirmed.

The Kuwait authorities invests cash by means of a fund known as Kuwait Investment Authority, which is registered as a international portfolio investor (FPI) with the Securities and Exchange Board of India (Sebi). The Qatar authorities invests in India by means of Qatar Holdings, other than oblique investments by means of Qatar Insurance Company and Doha Bank.

While the exemption to ADIA applies solely to infrastructure investments in India, different kinds of investments reminiscent of fairness investments are lined underneath the double tax avoidance settlement (DTAA).

Tax specialists say, the treaty between India and the UAE additionally offers useful tax charges to investments made by the UAE-based buyers in comparison with buyers from different nations.

According to a Bloomberg report in November, ADIA is contemplating $50 billion value investments in India. The fund has invested in Cube Highways, which has a portfolio of 27 roads in India. ADIA additionally has publicity to the renewable sector in India by means of its stake in firms like Renew Power and Greenko group. The fund has additionally invested within the infrastructure-focused various funding funds (AIFs) reminiscent of particular state of affairs funds. Also, ADIA has invested in lots of blue-chip listed firms, together with Reliance Retail and Adani Group firms, information confirmed.