Income tax exemption timelines extended until 2030 for sovereign wealth & pension funds

Income Tax Exemption Timelines Extended by 6 Years for Select Assessees: The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has extended until 2030 certain tax exemption timelines applicable to sovereign wealth funds and pension funds along with other notified investors. The latest move by the CBDT --  primarily responsible for administering direct taxes such as income tax and corporate tax -- impacts various exemptions available to such entities under Section 10(23FE) of the Income Tax Act.

In an official notification, dated September 1, the Finance Ministry introduced the Income-tax Rules, 2025, amending Rule 2DCA of the Income-tax Rules, 1962. 

This amendment shifts the investment timelines that were originally linked to FY25 and FY26 to FY31 and FY32, respectively. 

The six-year extension is aimed at giving foreign investors greater confidence to commit their long-term capital to select sectors in India.

What does this extension mean?

Simply put, this CBDT decision effectively provides a six-year extension for eligible entities to invest in the country while continuing to avail certain tax exemption benefits under Section 10(23FE) of income tax laws.

3 noteworthy changes

Three main explanatory references to 2024 have been replaced with 2030.

• All references to FY25 have now been changed to 2030-31
• All references to FY26 have been changed to FY32
• In explanatory clauses, 2024 has been replaced with 2030

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What does Section 10(23FE) cater to?

Section 10(23FE) of the income tax laws exempts income earned by certain notified entities, including sovereign wealth funds and pension funds, from investments in sectors such as infrastructure and other priority areas in India. 

This provision is particularly designed to attract long-term, stable capital to areas that require sustained funding support.

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