To invest in India, the central government has given 100 percent exemption in income tax. With this, MIC Redwood has become the first company to get 100% income tax exemption in India.
new Delhi. The Government of India at the Center took a big decision, giving 100% tax exemption to Abu Dhabi’s Sovereign Wealth Fund- MIC Redwood 1 RSC Limited. Has announced Wealth funds have been given 100 percent exemption in income tax to invest. The government says that MIC Redwood has been given this tax exemption to increase long-term investment in India’s top priority sector, including the country’s infrastructure sector. The Central Board of Direct Taxes (CBDT) said in its notification that this company has been exempted under section 10 (23FE) of Income Tax. Let us tell you that MIC Redwood has become the first company in India to get 100% income tax exemption.
CBDT has completed the notification process in record time to give MIC Redwood 100% exemption in income tax. The company applied for tax exemption on 18 September 2020. All the meetings to give tax exemption were done through video conferencing.
After this, MIC Redwood sent its final reply on 20 October. After this, CBDT, in consultation with the Law Ministry, announced 100% tax rebate to the company on 2 November. The Central Government has given tax exemption to the company under the Finance Act, 2020.
First of all know what is Sovereign Wealth Fund? Governments of countries like Saudi Arabia earn a lot of money through crude oil and their country costs are less. In such a situation, their budget is always surplus. This means that the amount that the government will spend in a financial year, its earnings from tax and other sources are more. It also means that the government will collect more money than the amount it spends on public welfare work. This kind of budget is made to control inflation and this helps in reducing demand.
In such a situation, many small countries like Saudi Arabia, Norway transfer their money to a company. That company, invests worldwide and earns huge money through it. This is what is called the Sovereign Wealth Fund .
Now the question arises that how will India benefit from this?Asif Iqbal, head of research at Escort Security told News18 Hindi that India will benefit greatly from this. Because the investment will accelerate. So the infrastructure will develop faster. In such a situation more job opportunities will also be created.
The government hopes that this decision will increase foreign funding and FDI in the infrastructure sector, which will further boost the country’s economy. MIC Redwood will get tax exemption from 2 November 2020 to 31 March 2024. Let us tell you that the guidelines related to getting tax exemption were released by CBDT on July 22, 2020.
Impact on the economy The Indian economy has been opened up to Foreign Direct Investment (FDI) and companies have been given a variety of leeway for long-term investment in the country. With this decision of the government, MIC Redwood will no longer have to pay any tax on income from interest, dividend and long term capital gains. In such a situation, companies will increasingly invest in India. The country’s foreign capital reserves will increase rapidly.
Asif says that the central government has completely banned P-Notes. In such a situation, investment in Sovereign Wealth Fund will increase investment in the stock market and mutual funds. Hence, there is hope for a boom in the stock market.
He told that this will be an investment for the long term. In such a situation, liquidity will increase in the Indian economy. Therefore, good growth will be seen in many sectors including infrastructure.
