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The Income Tax Department has notified exemptions to four pension and long-term funds from Canada for investment in India. It will be applicable on investment made on or before March 31, 2024.
IT Act
These funds include Caisse de dépôt et placement du Québec, CDPQ Fixed Income XI Inc, e Ivanhoe Logistics India Inc and e CDPQ Infrastructures Asia III Inc. India is looking for long term investment especially in the infrastructure sector. Officials feel detailed and timely notification about exemptions will help the funds to take prompt decision about investment in India.
Exemption is subject to certain conditions. The fund will be required to file return of income, for all the relevant previous years falling within the period beginning from the date in which the said investment has been made and ending on the date on which such investment is liquidated.
The fund will intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter. It will be required to maintain a segmented account of income and expenditure in respect of such investment which qualifies for exemption under the Income Tax Act.
All the funds are continued to be regulated under the Canadian law. The fund will be 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.
Not more than ten per cent of the total value of the assets administered or invested by the fund are allowed for the purpose other than the purpose of investment. The earnings and assets of the assessee should be used only for meeting statutory obligations. It will not have any loans or borrowings, directly or indirectly, for the purposes of making investment in India. The fund will not participate in the day-to-day operations of investee.
However, the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director will not be considered as participation in the day-to-day operations of the investee.
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